Both authors contributed equally to the paper. The helpful comments of Jerry Davis, Paul Hirsch, Matt Kraatz, Marshall Meyer, Brian Uzzi, three anonymous ASO reviewers, and seminar participants at MIT and Stanford University are appreciated. We also thank Rodger Voorhies and Ann Yoo for assistance in data collection, and Linda Pike for her valuable editorial advice. While current debates about ...

Conventional wisdom suggests that CEO membership of the compensation committee is an open invitation to rent extraction by self-serving executives. However, using data from New Zealand – where CEO compensation committee membership is relatively common – we find that annual pay increments for CEOs with this apparent advantage averaged six percentage points less than those enjoyed by other CEOs d...

We used the results from Financial World’s widely publicized certification contest, CEO of the Year, to investigate the impact of such contests on firm performance and executive compensation. A certification contest ranks actors on performance criteria that key stakeholders accept as credible and legitimate. We found that certified CEOs received higher compensation than noncertified CEOs when p...

This thesis consists of three essays and studies CEO compensation and mergers and acquisitions in empirical corporate finance. The first essay is sole-authored and is titled ‘The Effect of Social Interactions on Executive Compensation.’ The second essay ‘The Role of Investment Banker Directors in M&A: Can Experts Help?’ is a joint work with Qianqian Huang, Erik Lie, and Ke Yang. The third essay...

We analyze several proposals to restrict CEO compensation and calibrate two models of executive compensation that describe how rms would react to dierent types of restrictions. We nd that many restrictions would have unintended consequences. Restrictions on total realized (ex-post) payouts lead to higher average compensation, higher rewards for mediocre performance, lower risk-taking incentives...

Scholars frequently argue whether the sharp rise in chief executive officer (CEO) pay in recent years is “efficient” or is a consequence of “rent extraction” because of the failure of corporate governance in individual firms. This article argues that governance failure must be conceptualized at the market rather than the firm level because excessive pay increases for even relatively few CEOs a ...

We examine the effect of the incentives of the members of the board of directors on shareholder wealth, CEO compensation and the sensitivity of this compensation to corporate performance in laboratory setting. Two methods of appointing the board, one by the CEO and the other by the largest shareholder, constitute the main treatment. The board sets the compensation for the CEO, who makes product...

Is executive compensation influenced by the composition of the board of directors? About 8% of chief executive officers (CEOs) are reciprocally interlocked with another CEO—the current CEO of firm A serves as a director of firm B and the current CEO of firm B serves as a director of firm A. Roughly 20% of firms have at least one current or retired employee sitting on the board of another firm a...