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The Anglo-American financial influence on CEO compensation in non-Anglo-American firms

Author

Listed:
  • Lars Oxelheim

    ([1] Lund Institute of Economic Research, Lund University, Sweden [2] The Research Institute of Industrial Economics (IUI), Stockholm, Sweden [3] 4These authors have contributed equally to this work)

  • Trond Randøy

    ([1] 3Agder University College and Agder Research, Kristiansand, Norway [2] 4These authors have contributed equally to this work)

Abstract

This study examines the impact of Anglo-American financial markets on CEO compensation. Starting from a sample of Norwegian and Swedish listed firms, we analyse this effect as manifested in the capital market (Anglo-American cross-listing) and in the market for corporate control (Anglo-American board membership). These effects are analysed together with the geographically broader effect of the product and service market internationalisation of the firm. We conclude that all three effects contribute positively to the level of CEO compensation. We argue that the higher CEO compensation found in firms exposed to Anglo-American financial influence – as compared with firms not subject to such influence – reflects institutional contagion, the demand for and supply of viable CEO candidates, and a pay premium for increased risk of dismissal. Journal of International Business Studies (2005) 36, 470–483. doi:10.1057/palgrave.jibs.8400144

Suggested Citation

  • Lars Oxelheim & Trond Randøy, 2005. "The Anglo-American financial influence on CEO compensation in non-Anglo-American firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(4), pages 470-483, July.
  • Handle: RePEc:pal:jintbs:v:36:y:2005:i:4:p:470-483
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    Citations

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    Cited by:

    1. Hermes, Cornelis & Oxelheim, L. & Randoy, Trond & Hooghiemstra, Reginald, 2015. "The impact of board internationalization on earnings management," Research Report 15010-I&O, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Brian G. M. Main & Calvin Jackson & John Pymm & Vicky Wright, 2008. "The Remuneration Committee and Strategic Human Resource Management," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 225-238, May.
    3. Gerwin Laan & Hans Ees & Arjen Witteloostuijn, 2010. "Is pay related to performance in The Netherlands? An analysis of Dutch executive compensation, 2002–2006," De Economist, Springer, vol. 158(2), pages 123-149, June.
    4. repec:kap:jmgtgv:v:21:y:2017:i:3:d:10.1007_s10997-016-9359-z is not listed on IDEAS
    5. Hearn, Bruce, 2014. "Institutional impact on the expropriation of private benefits of control in North Africa," Research in International Business and Finance, Elsevier, vol. 30(C), pages 1-23.
    6. Lars Oxelheim & Trond Randøy & Arthur Stonehill, 2012. "What can international finance add to international strategy?," Chapters,in: Handbook of Research on International Strategic Management, chapter 12, pages 238-253 Edward Elgar Publishing.
    7. Vaaler, Paul M. & Schrage, Burkhard N., 2006. "Legal System and Rule of Law Effects on US Cross-Listing to Bond by Emerging-Market Firms," Working Papers 06-0126, University of Illinois at Urbana-Champaign, College of Business.
    8. Schmid, Stefan & Dauth, Tobias, 2014. "Does internationalization make a difference? Stock market reaction to announcements of international top executive appointments," Journal of World Business, Elsevier, vol. 49(1), pages 63-77.
    9. Hearn, Bruce, 2013. "The impact of board governance on director compensation in West African IPO firms," Research in International Business and Finance, Elsevier, vol. 28(C), pages 82-104.
    10. Hsin-Hui Chiu & Lars Oxelheim & Clas Wihlborg & Jianhua Zhang, 2016. "Macroeconomic Fluctuations as Sources of Luck in CEO Compensation," Journal of Business Ethics, Springer, vol. 136(2), pages 371-384, June.
    11. Mallin, Chris & Melis, Andrea & Gaia, Silvia, 2015. "The remuneration of independent directors in the UK and Italy: An empirical analysis based on agency theory," International Business Review, Elsevier, vol. 24(2), pages 175-186.
    12. McGuinness, Paul B. & Vieito, João Paulo & Wang, Mingzhu, 2017. "The role of board gender and foreign ownership in the CSR performance of Chinese listed firms," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 75-99.
    13. Oxelheim, Lars & Randøy, Trond, 2013. "Globalization of monitoring practices: The case of American influences on the dismissal risk of European CEOs," Journal of Economics and Business, Elsevier, vol. 70(C), pages 3-15.
    14. Lars Oxelheim & Kevin Clarkson, 2015. "Cronyism and the Determinants of Chairman Compensation," Journal of Business Ethics, Springer, vol. 131(1), pages 69-87, September.
    15. Paul B. McGuinness, 2016. "Post-IPO performance and its association with subscription cascades and issuers’ strategic-political importance," Review of Quantitative Finance and Accounting, Springer, vol. 46(2), pages 291-333, February.
    16. Gibson Hosea Munisi & Roy Mersland, 2016. "Ownership, Board Compensation and Company Performance in Sub-Saharan African Countries," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(2), pages 191-224, August.
    17. Lam, Kevin C.K. & McGuinness, Paul B. & Vieito, João Paulo, 2013. "CEO gender, executive compensation and firm performance in Chinese‐listed enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 1136-1159.
    18. repec:hur:ijaraf:v:7:y:2017:i:4:p:1-10 is not listed on IDEAS
    19. repec:spr:manint:v:53:y:2013:i:5:d:10.1007_s11575-013-0175-2 is not listed on IDEAS
    20. Dauth, Tobias & Pronobis, Paul & Schmid, Stefan, 2017. "Exploring the link between internationalization of top management and accounting quality: The CFO’s international experience matters," International Business Review, Elsevier, vol. 26(1), pages 71-88.
    21. Hüttenbrink, Alexander & Oehmichen, Jana & Rapp, Marc Steffen & Wolff, Michael, 2014. "Pay-for-performance – Does one size fit all? A multi-country study of Europe and the United States," International Business Review, Elsevier, vol. 23(6), pages 1179-1192.
    22. Liu, Xiaohui & Lu, Jiangyong & Chizema, Amon, 2014. "Top executive compensation, regional institutions and Chinese OFDI," Journal of World Business, Elsevier, vol. 49(1), pages 143-155.
    23. repec:eee:iburev:v:26:y:2017:i:5:p:991-1008 is not listed on IDEAS

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