The effects of ownership structure on conditions at the top

The case of CEO pay raises

Donald C. Hambrick, Sydney Finkelstein

Research output: Contribution to journalArticle

167 Citations (Scopus)

Abstract

We examine how ownership configuration affects the determination of CEO pay raises. Based on a sample of 188 firms over a 5‐year period, it was found that pay raises were based on distinctly different factors, depending on the ownership profile of the firm. In management‐controlled firms—where no single major owner exists—results suggest an overarching pay philosophy: maximize CEO pay, subject to demonstration of face legitimacy of that pay. In externally‐controlled firms—where a major (nonmanager) owner exists—results suggest a very different philosophy: minimize CEO pay, subject to the ability to attract/retain a satisfactory CEO.

Original languageEnglish (US)
Pages (from-to)175-193
Number of pages19
JournalStrategic Management Journal
Volume16
Issue number3
DOIs
StatePublished - Jan 1 1995

Fingerprint

Ownership structure
CEO pay
Ownership
Owners
Factors
Legitimacy
Chief executive officer

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Cite this

@article{2a3a5af44aa24e8aa015f53872695b1d,
title = "The effects of ownership structure on conditions at the top: The case of CEO pay raises",
abstract = "We examine how ownership configuration affects the determination of CEO pay raises. Based on a sample of 188 firms over a 5‐year period, it was found that pay raises were based on distinctly different factors, depending on the ownership profile of the firm. In management‐controlled firms—where no single major owner exists—results suggest an overarching pay philosophy: maximize CEO pay, subject to demonstration of face legitimacy of that pay. In externally‐controlled firms—where a major (nonmanager) owner exists—results suggest a very different philosophy: minimize CEO pay, subject to the ability to attract/retain a satisfactory CEO.",
author = "Hambrick, {Donald C.} and Sydney Finkelstein",
year = "1995",
month = "1",
day = "1",
doi = "10.1002/smj.4250160304",
language = "English (US)",
volume = "16",
pages = "175--193",
journal = "Strategic Management Journal",
issn = "0143-2095",
publisher = "John Wiley and Sons Ltd",
number = "3",

}

The effects of ownership structure on conditions at the top : The case of CEO pay raises. / Hambrick, Donald C.; Finkelstein, Sydney.

In: Strategic Management Journal, Vol. 16, No. 3, 01.01.1995, p. 175-193.

Research output: Contribution to journalArticle

TY - JOUR

T1 - The effects of ownership structure on conditions at the top

T2 - The case of CEO pay raises

AU - Hambrick, Donald C.

AU - Finkelstein, Sydney

PY - 1995/1/1

Y1 - 1995/1/1

N2 - We examine how ownership configuration affects the determination of CEO pay raises. Based on a sample of 188 firms over a 5‐year period, it was found that pay raises were based on distinctly different factors, depending on the ownership profile of the firm. In management‐controlled firms—where no single major owner exists—results suggest an overarching pay philosophy: maximize CEO pay, subject to demonstration of face legitimacy of that pay. In externally‐controlled firms—where a major (nonmanager) owner exists—results suggest a very different philosophy: minimize CEO pay, subject to the ability to attract/retain a satisfactory CEO.

AB - We examine how ownership configuration affects the determination of CEO pay raises. Based on a sample of 188 firms over a 5‐year period, it was found that pay raises were based on distinctly different factors, depending on the ownership profile of the firm. In management‐controlled firms—where no single major owner exists—results suggest an overarching pay philosophy: maximize CEO pay, subject to demonstration of face legitimacy of that pay. In externally‐controlled firms—where a major (nonmanager) owner exists—results suggest a very different philosophy: minimize CEO pay, subject to the ability to attract/retain a satisfactory CEO.

UR - http://www.scopus.com/inward/record.url?scp=84989052389&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84989052389&partnerID=8YFLogxK

U2 - 10.1002/smj.4250160304

DO - 10.1002/smj.4250160304

M3 - Article

VL - 16

SP - 175

EP - 193

JO - Strategic Management Journal

JF - Strategic Management Journal

SN - 0143-2095

IS - 3

ER -