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The Effect of Internationalization On CEO-Compensation

  • Oxelheim, Lars

    ()

    (Department of Business Administration, School of Economics and Management, Lund University)

  • Randøy, Trond

    ()

    (School of management Agder University College)

This study addresses how firms’ internationalization affects CEO compensation. Based on a sample of Swedish listed firms we analyze the effect of internationalization through the product market (export), the capital market (foreign exchange listing), and the corporate governance market (foreign board membership). We find that internationalization with respect to the capital market and the corporate governance market strengthens the relationship between product market internationalization and CEO compensation. A higher degree of internationalization - via the capital and corporate governance markets - is found to be associated with shorter CEO tenure. We argue that part of the higher CEO compensation in international oriented firms reflects a risk premium for harsher monitoring and thus lower job security.

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Paper provided by Lund University, Institute of Economic Research in its series Working Paper Series with number 2002/4.

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Length: 21 pages
Date of creation: 17 Dec 2002
Date of revision:
Handle: RePEc:hhb:lufewp:2002_004
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Phone: +46 46-222 32 61
Fax: +46 46-222 34 06
Web page: http://www.lri.lu.se/
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  17. Farok J Contractor & Sumit K Kundu & Chin-Chun Hsu, 2003. "A three-stage theory of international expansion: the link between multinationality and performance in the service sector," Journal of International Business Studies, Palgrave Macmillan, vol. 34(1), pages 5-18, January.
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