This study investigates the relation between corporate governance and CEO pay levels and the extent to which the higher pay found in firms using compensation consultants is related to governance differences. Using proxy statement disclosures from 2,110 companies, we find that CEO pay is higher in firms with weaker governance and that firms with weaker governance are more likely to use compensat...

The rise of management consultancy has been accompanied by increasingly marked faddish cycles in management techniques, but the mechanisms that underlie this relationship are not well understood. The authors develop a simple agent-based framework that models innovation adoption and abandonment on both the supply and demand sides. In opposition to conceptions of consultants as rhetorical wizards...