Board control, firm ownership structure, and chief executive compensation : an empirical analysis

• Main Author: Obaid, Mona
• Format: Others
• Published: 1997
• Online Access: http://spectrum.library.concordia.ca/338/1/MQ40203.pdf; Obaid, Mona <http://spectrum.library.concordia.ca/view/creators/Obaid=3AMona=3A=3A.html> (1997) Board control, firm ownership structure, and chief executive compensation : an empirical analysis. Masters thesis, Concordia University.

The degree of board control and a firm's ownership structure have an important role in the determination of chief executive officer (CEO) compensation in large U.S. corporations. This study uses a model of political factors to attempt to describe their influence on both the overall amount and form of CEO compensation under differing growth and risk conditions. Past research indicates that powerful boards limit a CEOs' ability to control decisions made, such as those that have to do with setting their compensation (Finkelstein and Hambrick, 1988; Westphal and Zajac, 1994). Also, that both institutional and large block holders have the power and the incentive to monitor CEO actions to make sure they are in their own interest. Finally, it is expected that both investors and board members are to make use of different forms of compensation depending on a firm's level of risk and growth opportunities. The findings based on data from a cross-sectional set of 362 Business Week firms are both supporting and contradictory.