Corporate Governance, Takeovers, and Top-Management Compensation: Theory and Evidence

  title={Corporate Governance, Takeovers, and Top-Management Compensation: Theory and Evidence},
  author={Richard M. Cyert and Sok-Hyon Kang and Praveen Kumar},
  journal={Manag. Sci.},
We examine, both theoretically and empirically, top-management compensation in the presence of agency conflicts when shareholders have delegated governance responsibilities to a self-interested Board of Directors (BOD). We develop a theoretical framework that explicitly incorporates the BOD as a strategic player, models the negotiation process between the CEO and the BOD in designing CEO compensation, and considers the impact of potential takeovers by large shareholders monitoring the CEO-BOD… 
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