The CEO pay slice: Managerial power or efficient contracting? Some indirect evidence

Bugeja, M; Matolcsy, Z; Spiropoulos, H

The CEO pay slice: Managerial power or efficient contracting? Some indirect evidence

Bugeja, M

Matolcsy, Z

Spiropoulos, H

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Publication Type:: Journal Article
Citation:: Journal of Contemporary Accounting and Economics, 2017, 13 (1), pp. 69 - 87
Issue Date:: 2017-04-01

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Field	Value	Language
dc.contributor.author	Bugeja, M https://orcid.org/0000-0002-1941-5092	en_US
dc.contributor.author	Matolcsy, Z https://orcid.org/0000-0001-6566-5079	en_US
dc.contributor.author	Spiropoulos, H https://orcid.org/0000-0002-7748-6577	en_US
dc.date.available	2016-09-13	en_US
dc.date.issued	2017-04-01	en_US
dc.identifier.citation	Journal of Contemporary Accounting and Economics, 2017, 13 (1), pp. 69 - 87	en_US
dc.identifier.issn	1815-5669	en_US
dc.identifier.uri	http://hdl.handle.net/10453/124488
dc.description.abstract	© 2017 Elsevier Ltd This paper uses the CEO Pay Slice (CPS) to provide insight into the managerial power versus efficient contracting debate on CEO compensation. Based on a sample of 9978 U.S. listed firms for the period 2001–2010 our evidence is inconsistent with managerial power. For instance, we find that the CPS of a newly appointed CEO does not differ to that of the outgoing CEO and also does not increase over time. Furthermore, we find no relation between the CPS and subsequent firm performance, or between a measure of excess CPS and subsequent firm performance. In addition, we show that most firms are quick to reduce excess CPS levels. However, for a small subsample in which excessive CPS persists, we observe a negative relation between CPS and subsequent firm performance. Overall our evidence is largely consistent with an efficient contracting explanation of CEO compensation as opposed to a managerial power explanation.	en_US
dc.relation.ispartof	Journal of Contemporary Accounting and Economics	en_US
dc.relation.isbasedon	10.1016/j.jcae.2017.01.003	en_US
dc.title	The CEO pay slice: Managerial power or efficient contracting? Some indirect evidence	en_US
dc.type	Journal Article
utslib.citation.volume	1	en_US
utslib.citation.volume	13	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	1	en_US
pubs.publication-status	Published	en_US
pubs.volume	13	en_US

Abstract:

© 2017 Elsevier Ltd This paper uses the CEO Pay Slice (CPS) to provide insight into the managerial power versus efficient contracting debate on CEO compensation. Based on a sample of 9978 U.S. listed firms for the period 2001–2010 our evidence is inconsistent with managerial power. For instance, we find that the CPS of a newly appointed CEO does not differ to that of the outgoing CEO and also does not increase over time. Furthermore, we find no relation between the CPS and subsequent firm performance, or between a measure of excess CPS and subsequent firm performance. In addition, we show that most firms are quick to reduce excess CPS levels. However, for a small subsample in which excessive CPS persists, we observe a negative relation between CPS and subsequent firm performance. Overall our evidence is largely consistent with an efficient contracting explanation of CEO compensation as opposed to a managerial power explanation.

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http://hdl.handle.net/10453/124488