TY - JOUR
T1 - The incentives of compensation consultants and CEO pay
AU - Cadman, Brian
AU - Carter, Mary Ellen
AU - Hillegeist, Stephen
N1 - Funding Information:
We gratefully acknowledge the financial support of the Alliance Center for Global Research and Development at INSEAD, Boston College, University of Utah, and The Wharton School. We appreciate helpful comments from Ross Watts (the editor), and Jennifer Gaver (the referee), Tim Gray, Sue Haka, Steve Matsunaga, Karen Nelson, Katerina Semida, and seminar participants at Chinese University of Hong Kong, Dartmouth College, George Washington University, INSEAD, Hong Kong University of Science and Technology, Northwestern University, Southern Methodist University, University of California at Davis, University of Texas at Dallas, University of Utah, University of Washington, Washington University of St. Louis, and participants at the 2008 European Accounting Association Annual meeting and 2008 London Business School Accounting Symposium. This project involved extensive hand collection of data. We thank Nichole Kim, Cheng Li, Christine Roh, Katerina Semida, Shari Singh and YinYin Yu for their help with this effort. Some of the data has been supplied by The Corporate Library.
Copyright:
Copyright 2010 Elsevier B.V., All rights reserved.
PY - 2010/4
Y1 - 2010/4
N2 - We examine whether compensation consultants' potential cross-selling incentives explain more lucrative CEO pay packages using 755 firms from the S&P 1500 for 2006. Critics allege that these incentives lead consultants to bias their advice to secure greater revenues from their clients [Waxman, H., 2007. Executive pay: conflicts of interest among compensation consultants. United States House of Representatives Committee on Oversight and Government Reform Majority Staff, December]. Among firms that retain consultants, we are unable to find widespread evidence of higher levels of pay or lower pay-performance sensitivities for clients of consultants with potentially greater conflicts of interest. Overall, we do not find evidence suggesting that potential conflicts of interest between the firm and its consultant are a primary driver of excessive CEO pay.
AB - We examine whether compensation consultants' potential cross-selling incentives explain more lucrative CEO pay packages using 755 firms from the S&P 1500 for 2006. Critics allege that these incentives lead consultants to bias their advice to secure greater revenues from their clients [Waxman, H., 2007. Executive pay: conflicts of interest among compensation consultants. United States House of Representatives Committee on Oversight and Government Reform Majority Staff, December]. Among firms that retain consultants, we are unable to find widespread evidence of higher levels of pay or lower pay-performance sensitivities for clients of consultants with potentially greater conflicts of interest. Overall, we do not find evidence suggesting that potential conflicts of interest between the firm and its consultant are a primary driver of excessive CEO pay.
KW - Compensation consultants
KW - Corporate advisors
KW - Executive compensation
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U2 - 10.1016/j.jacceco.2009.03.002
DO - 10.1016/j.jacceco.2009.03.002
M3 - Article
AN - SCOPUS:76849091699
SN - 0165-4101
VL - 49
SP - 263
EP - 280
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 3
ER -