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How does CEO Compensation in U.S Corporations Compare with European and British Firms? A Review of the Literature

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  • Brian Maruffi
  • Augustine C. Arize
  • Manar Awad
  • John Malindretos
  • Alfred Verrrios

Abstract

During the past 10 years, it has been speculated that the international  differences or “pay gap†between the compensation of chief executive officers (CEOs) in the U.S. and that of their foreign counterparts has significantly decreased. The growing similarity has been a result of widespread internationalization (international diversity of the board and foreign institutional ownership, investor demand, and sales) and Americanization of non-U.S. firms (directors with U.S. board experience and U.S. institutional ownership, cross-listings, and acquisitions) (Fernandes et al., 2012, p.348). This paper will examine the growing similarity in CEO compensation across countries. Various determinants of CEO compensation will be examined, including- governmental regulations, shareholder interest in light of the board of directors and an executive’s institutional ownership, stock options, the size of a firm in light of sales revenue and profit and the number of employees in a firm, and bonus plans. The research will look at the parallel in compensation of CEOs in the U.S. with those in the UK, Germany, and Japan and its adaptation throughout the years.  Â

Suggested Citation

  • Brian Maruffi & Augustine C. Arize & Manar Awad & John Malindretos & Alfred Verrrios, 2015. "How does CEO Compensation in U.S Corporations Compare with European and British Firms? A Review of the Literature," Accounting and Finance Research, Sciedu Press, vol. 4(3), pages 114-114, August.
    • Handle: RePEc:jfr:afr111:v:4:y:2015:i:3:p:114
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    References listed on IDEAS

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    3. Galbraith, John Kenneth, 1988. "Time and the New Industrial State," American Economic Review, American Economic Association, vol. 78(2), pages 373-376, May.
    4. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    5. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December.
    6. Dye, Ra, 1992. "Relative Performance Evaluation And Project Selection," Journal of Accounting Research, Wiley Blackwell, vol. 30(1), pages 27-52.
    7. Bebchuk, Lucian Arye & Stole, Lars A, 1993. "Do Short-Term Objectives Lead to Under- or Overinvestment in Long-Term Projects?," Journal of Finance, American Finance Association, vol. 48(2), pages 719-729, June.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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