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| Author: | Certo, S. T. (et al.) |
| Title: | Board of directos' self interest: expanding for pay in corporate acquisitions? |
| Journal: | Journal of Business Ethics
2008 : JAN II, VOL. 77:2, p. 219-230 |
| Index terms: | board of directors incentives compensation directors ethics agency theory decision making |
| Language: | eng |
| Abstract: | This article focuses on director compensation as an ethical issue. When making strategic decisions, the directors might support alternatives leading to an increase in director pay. This means that there is a conflict between directors' self-interest and duty. In those cases, directors become agents and thus they cannot fulfill their role as shareholder interest protectors. As a method, the study uses matched-sample design. Firms are divided into two groups, firms making an acquisition and firms not engaged in an acquisition during the same time period. As a result, a statistically significant difference between the outside director compensation in those two groups of firms were found. Outside directors in firms making an acquisition had more than double compensation in comparison to those in the non-acquiring firms. |
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