Who is in whose pocket? Director compensation, board independence, and barriers to effective monitoring

• 成果类型: Article
• 署名作者: Ryan, HE Jr; Wiggins, RA III
• 署名单位: Louisiana State University System; Louisiana State University; Bentley University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2003.11.002
• 发表日期: 2004
• 页码: 497-524
• 关键词: Board of directors; COMPENSATION; Bargaining power; Agency theory; regulation

摘要

We use a bargaining framework to examine empirically the relations between director compensation and board-of-director independence. Our evidence suggests that independent directors have a bargaining advantage over the CEO that results in compensation more closely aligned with shareholders' objectives. Firms with more outsiders on their boards award directors more equity-based compensation. When the CEO's power over the board increases, compensation provides weaker incentives to monitor. Firms with more inside directors and with entrenched CEOs use less equity-based pay. Furthermore, firms with entrenched CEOs and CEOs who also chair the board are less likely to replace cash pay with equity. (C) 2004 Elsevier B.V.. All rights reserved.