Abstract
Director compensation can potentially represent an ethical minefield. When faced with supporting strategic decisions that can lead to an increase in director pay, directors may consider their own interests and not solely those of the shareholders to whom they are legally bound to represent. In such cases, directors essentially become agents, rather than those installed to protect principals (shareholders) from agents. Using acquisitions as a study context, we employ a matched-pair design and find a statistically significant difference in outside director compensation between acquiring and control firms. Outside directors of acquiring firms earn more than twice as much as their counterparts in the matched-sample.
Original language | English (US) |
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Pages (from-to) | 219-230 |
Number of pages | 12 |
Journal | Journal of Business Ethics |
Volume | 77 |
Issue number | 2 |
DOIs | |
State | Published - Jan 2008 |
Externally published | Yes |
Keywords
- Acquisitions
- Agency theory
- Board of directors
- Director compensation
ASJC Scopus subject areas
- Business and International Management
- General Business, Management and Accounting
- Arts and Humanities (miscellaneous)
- Economics and Econometrics
- Law