Inside the black box: The role and composition of compensation peer groups

  title={Inside the black box: The role and composition of compensation peer groups},
  author={Michael W. Faulkender and J. Yang},
  journal={Journal of Financial Economics},
  • Michael W. Faulkender, J. Yang
  • Published 2010
  • Business
  • Journal of Financial Economics
  • This paper considers the features of the newly disclosed compensation peer groups and demonstrates their significant role in explaining variations in chief executive officer (CEO) compensation beyond that of other benchmarks such as the industry-size peers. After controlling for industry, size, visibility, CEO responsibility, and talent flows, we find that firms appear to select highly paid peers to justify their CEO compensation and this effect is stronger in firms where the compensation peer… CONTINUE READING
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