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 |
Files in This Item:
File | Description | Size | Format | |
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SSRN-id244540.pdf | 175.94 kB | Adobe PDF | View/Open |
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