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  • April 2010
  • Article
  • Journal of Accounting & Economics

Executive Pay and 'Independent' Compensation Consultants

By: K. J. Murphy and Tatiana Sandino
  • Format:Print
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Abstract

Executive compensation consultants face potential conflicts of interest that can lead to higher recommended levels of CEO pay, including the desires to "cross-sell" services and to secure "repeat business." We find evidence in both the US and Canada that CEO pay is higher in companies where the consultant provides other services, and that pay is higher in Canadian firms when the fees paid to consultants for other services are large relative to the fees for executive-compensation services. Contrary to expectations, we find that pay is higher in US firms where the consultant works for the board rather than for management.

Keywords

Compensation Consultants; Conflicts Of Interest; CEO Pay; Board Of Directors; Director Pay; Disclosure; Conflict of Interests; Governing and Advisory Boards; Corporate Disclosure; Executive Compensation; Corporate Governance; Consulting Industry; Canada; United States

Citation

Murphy, K. J., and Tatiana Sandino. "Executive Pay and 'Independent' Compensation Consultants." Journal of Accounting & Economics 49, no. 3 (April 2010): 247–262.
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About The Author

Tatiana Sandino

Accounting and Management
→More Publications

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More from the Authors
  • From Online Content to Offline Results: Effects of a Best Practices Initiative on an Enterprise Social Network By: Shelley Xin Li and Tatiana Sandino
  • Who Should Select New Employees, Headquarters or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain By: Carolyn Deller and Tatiana Sandino
  • Effects of a Tournament Incentive Plan Incorporating Managerial Discretion in a Geographically Dispersed Organization By: Carolyn Deller and Tatiana Sandino
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