Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26505
Authors: 
Frydman, Carola
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2460
Abstract: 
In recent years, a large academic debate has tried to explain the rapid rise in CEO pay experienced over the past three decades. In this article, I review the main proposed theories, which span views of compensation as the result of a competitive labor market for executives to theories based on excess of managerial power. Some of these hypotheses have found support in cross-sectional evidence, but it has proven more difficult to determine which factors have caused the observed changes in pay over time. An alternative strategy is to evaluate the fit of plausible explanations out of sample by contrasting them with the evolution in executive pay and the market for managers during earlier time periods. A case study of General Electric suggests that evidence for earlier decades can speak to the recent trends and reveals the limitations of current explanations to address the long-run data.
Subjects: 
Executive compensation
managerial incentives
corporate governance
market for managers
JEL: 
J33
M52
N32
Document Type: 
Working Paper

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