This study investigates dynamics and convergence in CEO pay in Australia?s largest corporations over an 18 year period. Utilizing dynamic panel estimators, we find that CEO pay is driven by dynamic adjustments, firm size, board size, CEO tenure and firm performance. The largest pay-performance effect emerges for long-term incentive pay. We also show that by ignoring dynamics, prior studies may have understated the size of payperformance effects. Analysis of convergence shows a clear pattern of catch up among firms making CEO pay more equitable over time. The analysis points to efficiency in CEO remuneration contracts rather than managerial entrenchment.
Series
School Working Paper - Economics Series ; SWP 2012/3Pagination
1 - 47Publisher
Deakin University, School of Accounting, Economics and FinancePlace of publication
Geelong, Vic.Language
engNotes
School working paper (Deakin University. School of Accounting, Economics and Finance) ; 2012/3
This study investigates dynamics and convergence in CEO pay in Australia?s largest corporations over an 18 year period. Utilizing dynamic panel estimators, we find that CEO pay is driven by dynamic adjustments, firm size, board size, CEO tenure and firm performance. The largest pay-performance effect emerges for long-term incentive pay. We also show that by ignoring dynamics, prior studies may have understated the size of payperformance effects. Analysis of convergence shows a clear pattern of catch up among firms making CEO pay more equitable over time. The analysis points to efficiency in CEO remuneration contracts rather than managerial entrenchment.Publication classification
CN.1 Other journal articleCopyright notice
2012, The Authors