Corporate Governance Mechanisms: The Case of Compensation Consultants
2015
This article analyzes the effect of compensation consultants on executive pay practices. From a theoretical perspective, there are conflicting optimal contracting and managerial power related arguments on their role in the pay-setting process. Moreover, empirical evidence also indicates an academic debate on their role within the firm's corporate governance system. Overall, research so far still has not given a clear answer on whether they are part of the agency problem or they act at the shareholders' interest and thus contribute towards optimal contracting.
Keywords:
compensation consultants;
agency theory;
managerial power theory;
corporate governance;
executive pay
Keywords:
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