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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27453

Title: Compensation of Outside Directors: An Empirical Analysis of Economic Determinants
Authors: Bryan, Stephen
Hwang, Lee-Seok
Lilien, Steven
Keywords: Director compensation
outside directors
director pension plan
incentive contracts
agency theory
Issue Date: Sep-2000
Series/Report no.: April Klein-4
Abstract: Little is known about the economic environments and determinants of the compensation arrangements for outside board members. As delegated monitors of corporate management, board members act as shareholders' agents. Thus, a potential for misaligned interests exists, requiring in turn incentive arrangements that are incentive-compatible and individually rational. We study the economic determinants of both the levels and mix of compensation for outside board members. We also examine the effects of the existence of a director pension plan on the relation between director compensation and the hypothesized determinants. In sum, and contrary to criticism that the board of directors is often a passive, ineffective entity that dislikes conflict with incumbent management, we find that board compensation is structured to mitigate agency problems inherent in firms whose management control is separated from ownership.
URI: http://hdl.handle.net/2451/27453
Appears in Collections:Accounting Working Papers

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