IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v4y2015i3p114.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/7697/4605
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/7697
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vidhi Chhaochharia & Yaniv Grinstein, 2009. "CEO Compensation and Board Structure," Journal of Finance, American Finance Association, vol. 64(1), pages 231-261, February.
    2. Galbraith, John Kenneth, 1988. "Time and the New Industrial State," American Economic Review, American Economic Association, vol. 78(2), pages 373-376, May.
    3. Jon Bakija & Adam Cole & Bradley Heim, 2008. "Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data," Department of Economics Working Papers 2010-22, Department of Economics, Williams College, revised Jan 2012.
    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. 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.
    6. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
    7. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December.
    8. Dye, Ra, 1992. "Relative Performance Evaluation And Project Selection," Journal of Accounting Research, Wiley Blackwell, vol. 30(1), pages 27-52.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Park, Sohee, 2023. "Customer prospects and pay-performance sensitivity: Evidence from Korea," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Renneboog, Luc & Zhao, Yang, 2011. "Us knows us in the UK: On director networks and CEO compensation," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1132-1157, September.
    3. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    4. Engel, Ellen & Hayes, Rachel M. & Wang, Xue, 2003. "CEO turnover and properties of accounting information," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 197-226, December.
    5. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    6. Chen, Jie & Song, Wei & Goergen, Marc, 2019. "Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 458-481.
    7. Yu, Zeng, 2024. "Essays on incentive contract and corporate finance," Other publications TiSEM 6f66f49e-d710-44f6-943d-9, Tilburg University, School of Economics and Management.
    8. Dyballa, Katharina & Kraft, Kornelius, 2015. "Does codetermination affect the composition of variable versus fixed parts of executive compensation?," ZEW Discussion Papers 15-053, ZEW - Leibniz Centre for European Economic Research.
    9. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    10. Yeon-Koo Che & Seung-Weon Yoo, 2001. "Optimal Incentives for Teams," American Economic Review, American Economic Association, vol. 91(3), pages 525-541, June.
    11. Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
    12. Chaigneau, Pierre, 2013. "Explaining the structure of CEO incentive pay with decreasing relative risk aversion," Journal of Economics and Business, Elsevier, vol. 67(C), pages 4-23.
    13. Gregorio Sánchez‐Marín & María Encarnación Lucas‐Pérez & Samuel Baixauli‐Soler & Brian G.M. Main & Antonio Mínguez‐Vera, 2022. "Excess executive compensation and corporate governance in the United Kingdom and Spain: A comparative analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2817-2837, October.
    14. Hongfei Tang, 2014. "Are CEO stock option grants optimal? Evidence from family firms and non-family firms around the Sarbanes–Oxley Act," Review of Quantitative Finance and Accounting, Springer, vol. 42(2), pages 251-292, February.
    15. Michael Haylock, 2022. "Distributional differences in the time horizon of executive compensation," Empirical Economics, Springer, vol. 62(1), pages 157-186, January.
    16. Justin Law & Wayne Yu, 2018. "Corporate spinoffs and executive compensation," Frontiers of Business Research in China, Springer, vol. 12(1), pages 1-25, December.
    17. Keller, Wolfgang & Olney, William W., 2021. "Globalization and executive compensation," Journal of International Economics, Elsevier, vol. 129(C).
    18. Fernández Méndez, Carlos & Pathan, Shams & Arrondo García, Rubén, 2015. "Monitoring capabilities of busy and overlap directors: Evidence from Australia," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 444-469.
    19. Neunzig, Alexander R., 2002. "Effiziente Fixlöhne, Arbeitsfreude und Crowding-Effekte," CSLE Discussion Paper Series 2002-03, Saarland University, CSLE - Center for the Study of Law and Economics.
    20. Dyballa, Katharina & Kraft, Kornelius, 2016. "How Do Labor Representatives Affect Incentive Orientation of Executive Compensation?," IZA Discussion Papers 10153, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:4:y:2015:i:3:p:114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.