Document Type

Article

Publication Date

2011

Publication Title

Journal of Management & Governance

Volume

15

Issue

2

First Page

187

Keywords

Human resource planning, Chief executive officers, Boards of directors, Experimental/theoretical, Employee benefits & compensation, Business And Economics--Banking And Finance

Last Page

205

Abstract

We propose that outside CEO candidates will have greater bargaining power than insiders. As a result, outside CEO successors will likely receive greater total compensation than inside CEO successors. Outside successors, meantime, pose more risk to the hiring firm than inside successors due to higher information asymmetry. As a result, outside successor compensation packages are tilted towards more performance-related pay-at-risk, while inside successor packages have a higher percentage in salary. In addition, outside successors may want to utilize the structure of their compensation at their previous firm in their new contracts. Using a sample of 99 firms with outside successors who were not CEO in their prior firms, matched by industry and size to firms that hired inside candidates, we find evidence supporting these hypotheses.

DOI

10.1007/s10997-009-9095-8

Comments

The article available for download is a post print. The definitive version is published in the Journal of Management & Governance. The original publication is available at www.springerlink.com.

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