Record Details

CEO Compensation and Shareholder Value Orientation Among Large US Firms

The Economic and Social Review

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Field Value
 
Title CEO Compensation and Shareholder Value Orientation Among Large US Firms
 
Creator Shin, Taekjin
 
Subject —
 
Description The rise of shareholder value orientation among US firms has been studied extensively during the past few decades as a key component of financialisation. The firm-level mechanisms ofhow such institutional changes have affected firm behaviours are not well understood, however. This study examines the relationship between the shareholder value orientation of firms and financial rewards for the executive managers who run those companies. Using compensation data for 290 CEOs for an 11-year period, I demonstrate that CEOs at the firms with the appearance of shareholder value orientation – such as monitoring and incentive-alignment mechanisms – receive greater compensation than non-shareholder-value-orientation CEOs. Moreover, when the firms strengthen the appearance of shareholder value orientation, CEO pay increases the subsequent year. This suggests that firms adopt monitoring and incentive-alignment mechanisms in order to gain the appearance of shareholder value orientation rather than to curb executive compensation. By employing such symbolic management tactics, top managers at such firms earn greater legitimacy, a better reputation, and a higher valuation of the firms and executive talent. The findings suggest that executive compensation has played an important role in providing incentives for top managers to make strategic decisions that conform to the shareholder value maximisation principle.
 
Publisher The Economic and Social Review
 
Contributor —
 
Date 2013-02-19
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.esr.ie/article/view/36
 
Source The Economic and Social Review; Vol 43, No 4, Winter (2012): Dublin Workshop on Politics of Financialisation, May 24 2012, University College Dublin/Geary Institute; 535–559
0012-9984
 
Language eng
 
Relation http://www.esr.ie/article/view/36/28
 
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