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

176 Scopus citations

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 - 1995

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Fingerprint Dive into the research topics of 'The effects of ownership structure on conditions at the top: The case of CEO pay raises'. Together they form a unique fingerprint.

  • Cite this