Board control and ceo compensation

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Original languageEnglish
Pages (from-to)335-344
Journal / PublicationStrategic Management Journal
Issue number5
Publication statusPublished - Jun 1994
Externally publishedYes


The board of directors has been identified as a key internal control mechanism for setting CEO compensation. Theory suggests that CEOs will attempt to circumvent board control in an effort to maximize salary. This hypothesis was tested using a sample of 193 firms in a cross‐section of industries. Corporate governance literature was reviewed to develop a multiple indicator measure of board control. Although, as hypothesized, CEO salaries were greater in firms with lower levels of control, CEO compensation was not significantly related to firm size or profitability. Copyright © 1994 John Wiley & Sons, Ltd.

Research Area(s)

  • agency theory, Boards of directors, executive compensation, strategy implementation