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Czasopismo
2019 | 15 | nr 4 | 83--92
Tytuł artykułu

Corporate Diversification and CEO Compensation : Evidence from the Moderating Effect of Stock Ownership

Warianty tytułu
Języki publikacji
EN
Abstrakty
EN
The article is an attempt to assess whether Stock Ownership moderates the relationship between corporate diversification and CEO compensation. Based on agency theory, we develop the hypothesis of whether when CEOs hold a large fraction of their firms' outstanding stock, the CEOs are acting more as owners or shareholders than employees. This reduces the principal and agency relationship of agency theory, since CEOs are acting as owners rather than employees; thus the demand for further stock-based compensation is likely to be reduced because the interests of CEOs and shareholders are relatively aligned. For the purposes of this study, a sample of 2,448 CEO compensations across 1,622 firms from 1997 to 2002 was used to test several hypotheses. Corporate diversification was divided into two categories; international diversification and industry diversification. To test the hypotheses, multiple regression analysis was employed to examine stock ownership as a moderator variable on the relationship between international diversification and industry diversification and CEO total compensation with tenure, age, duality, and gender as control variables. The results indicate that stock ownership negatively and significantly influences the relationship between International diversification and CEO compensation. Additionally, the findings also confirm that stock ownership negatively and significantly influences the relationship between industrial diversification and CEO compensation. (original abstract)
Słowa kluczowe
Czasopismo
Rocznik
Tom
15
Numer
Strony
83--92
Opis fizyczny
Twórcy
  • University of Maryland Eastern Shore
autor
  • Providence University, Taiwan
  • Frostburg State University
  • University of Maryland Eastern Shore
Bibliografia
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  • Duru, A. and Reeb, D. M. (2002). Geographic and industrial corporate diversification: The level and structure of executive compensation. Journal of Accounting, 17(1), 1.
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  • Lippert, R., and Moore, W. (1995). Monitoring versus bonding: shareholder rights and management compensation. Financial Management, 24, (3)5461.
  • Miller, D. J. (1995). CEO salary increases may be rational after all: Referents and contracts in CEO pay. Academy of Management Journal, 38(5), 1361-1386.
  • Murphy, K. J. (1985). Corporate performance and managerial remuneration: An empirical analysis. Journal of Accounting and Economics, 7(1-3), 1-42.
  • Sanders, W. G., and Carpenter, M.A. (1998). Internationalization and firm governance: The roles of CEO compensation, top team composition, and board structure. Academy of Management Journal, 41(2),158- 179.
  • Ryan, H. E. and Wiggins, R. A. (2002). The interactions between R & D: Investment decisions and compensation policy. Financial Management, 31(1), 5-30.
  • Yermack, D. (1995). Do corporations award CEO stock options effectively? Journal of Financial Economics, 39, 237-69.
  • Eisenhardt, K.M. (1989). Agency theory: Assessment and review. Academy of Management Review, 14,57-74.
Typ dokumentu
Bibliografia
Identyfikatory
Identyfikator YADDA
bwmeta1.element.ekon-element-000171585178

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