A Review of the Current Literature on Executive Compensation: New Insights and Understandings
Keywords:Agency problem, Corporate governance, Executive compensation, Firm.
AbstractThere have been a number of research projects which examined the issue of executive compensation with the objective of identifying the factors that influence executive compensation. However, despite those attempts there is yet to be a comprehensive paper that brings all the possible factors together in order to provide a better understanding of the factors driving executive compensation. The objective of this paper is to present a thorough discussion on the main drivers of executive compensation. To achieve this objective, a review of the current literature of the major factors driving executive compensation as published in leading research journals was carried out. Among the drivers identified are: firm size and performance, corporate governance issues and agency problems, structure of the board of directors, executive power and tenure, market factors, insider trading restrictions, and company characteristics.
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