CEO'S SHARE OF TOP-MANAGEMENT COMPENSATION, CHARACTERISTICS OF THE BOARD OF DIRECTORS AND FIRM-VALUE CREATION

• Published in: Allied Academies International Conference. Academy of Accounting and Financial Studies. Proceedings Vol. 18; no. 2; p. 39
• Main Authors: Deschênes, Sébastien, Bouaziz, Mohamed Zaher, Morris, Tania, Rojas, Miguel, Boubacar, Hamadou
• Format: Journal Article
• Language: English
• Published: Arden Jordan Whitney Enterprises, Inc 01.07.2013
• Subjects: Boards of directors; Book value; Chairman of the board; Chief executive officers; Corporate governance; Demonstrations & protests; Economic theory; Executive compensation; Impact analysis; Market value; Studies; Value creation; Variables; Wages & salaries

The study examines if certain board of directors characteristics influence the CEO's Pay Slice (CPS), i.e. the CEO's share of the combined compensation received by the five top-paid executives of the firm. The results show that the CPS is positively affected by the percentage of independent directors and negatively linked to director stock ownership. We also examine if CPS increases company valuation by investors, as predicted by the tournament theory. Our results upheld this view, showing that there is a positive link between CPS and company market value as predicted by the tournament theory. Although the effect is significant at a threshold of 95%, CPS only explains a small percentage of the variance in company market value. [PUBLICATION ABSTRACT]