Author: | Rose, N. Shepard, A. |
Title: | Firm diversification and CEO compensation: managerial ability or executive entrenchment? |
Journal: | RAND Journal of Economics
1997 : AUTUMN, VOL. 28:3, p. 489-514 |
Index terms: | COMPANIES CHIEF EXECUTIVE OFFICERS MANAGEMENT |
Language: | eng |
Abstract: | Investigating the relationship between CEO compensation and firm diversification over 1985-1990, the authors find that the CEO of a firm with two lines of business averages 13% more in salary and bonus than the CEO of a similar-sized but undiversified firm, ceteris paribus. The authors explore two potential explanations for this: the match of higher-ability CEOs with firms that are more difficult to manage, and the association of diversification with CEO entrenchment. |
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