I study how the distribution of CEO talent and that of CEO compensation vary across industries, and how product market characteristics affect these distributions. I develop a general equilibrium model that incorporates the competitive assignment of CEOs to firms in a framework in which firms engage in imperfect product market—specifically, monopolistic—competition. I use the model to address th...

This paper calculates numerical solutions to the principal-agent problem and compares the results to the stylized facts of CEO compensation. The numerical predictions come from parameterizing the models of Grossman and Hart and of Holmstrom and Milgrom. While the correct incentives for a CEO can greatly enhance a firm's performance, providing such incentives need not be expensive. For many para...

This research had investigated ownership structure and its impact on CEO compensation system in TSX/S&P and NYSE indexes companies from the period 2005 to 2010. The totaled of two hundred and forty companies were selected through random sample method. The research question for this study was: is there a relationship between CEO compensation, firm size, accounting firm performance, and corporate...

Executive compensation has increased dramatically over the past 15 years, but so has forced CEO turnover. We argue that part of the development of CEO pay can be explained by the adverse consequences that forced turnover implies for a CEO. We find that for the CEOs of the largest US corporations, a one percentage point increase in exogenous turnover risk is associated with $40,000 to $90,000 mo...

Insider Entrenchment and CEO Compensation in Entrepreneurial Firms: An Empirical Investigation By Arno Forst, Ph.D. A Dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Business at Virginia Commonwealth University. Virginia Commonwealth University, 2009 Chair: Dr. Benson Wier Professor, Department of Accounting This study investigates the...

Agency theory posits that debt-like compensation (such as defined-benefit pensions and other deferred compensation) aligns managerial interests more closely with those of debtholders and reduces the agency cost of debt. Consistent with theory, we find that a higher CEO relative leverage, defined as the ratio of the CEO's inside leverage (debt-toequity compensation) to corporate leverage, is ass...

Relative performance evaluation (RPE) in CEO compensation provides insurance against external shocks and yields a more informative measure of CEO actions. I argue that empirical evidence on the use of RPE is mixed because previous studies rely on a misspecified peer group. External shocks and flexibility in responding to the shocks are functions of, for example, the firm’s technology, the compl...

Relative performance evaluation (RPE) in chief executive officer (CEO) compensation provides insurance against external shocks and yields a more informative measure of CEO actions. I argue that empirical evidence on the use of RPE is mixed because previous studies rely on a misspecified peer group. External shocks and flexibility in responding to the shocks are functions of, for example, the fi...

We examine the effects of nonmonetary benefits on overall executive compensation from the perspective of the living environment at the firm headquarters. Companies in polluted, high crime rate, or otherwise unpleasant locations pay higher compensation to their chief executive officers (CEOs) than companies located in more livable locations. This premium in pay for quality of life is stronger wh...