{"title":"On the Right Side of the Faultline: Effects of Subgroups and CEO Inclusion on CEO Compensation","authors":"Charlotte Antoons, Alana Vandebeek","doi":"10.1111/1467-8551.12851","DOIUrl":null,"url":null,"abstract":"This study examines how subgroup formation resulting from group faultlines can affect corporate boards’ CEO compensation‐setting process. Group faultlines are hypothetical dividing lines that can split the board into subgroups based on directors’ diversity characteristics. Using a sample of US firms for the period 2007–2019, we find that if the CEO demographically belongs to the same faultline‐based subgroup as corporate directors who are members of the compensation committee, strong faultlines lead to higher CEO compensation. Furthermore, we show that joint tenure of directors and the CEO strengthens this relationship. Our results are robust to endogeneity concerns and a battery of sensitivity tests. Our findings make important contributions to the literature on CEO compensation, corporate governance and faultlines, as we consider not only the existence of faultlines in the board context but also how the composition of identity‐based subgroups affects CEO compensation.","PeriodicalId":48342,"journal":{"name":"British Journal of Management","volume":null,"pages":null},"PeriodicalIF":4.5000,"publicationDate":"2024-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"British Journal of Management","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1111/1467-8551.12851","RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines how subgroup formation resulting from group faultlines can affect corporate boards’ CEO compensation‐setting process. Group faultlines are hypothetical dividing lines that can split the board into subgroups based on directors’ diversity characteristics. Using a sample of US firms for the period 2007–2019, we find that if the CEO demographically belongs to the same faultline‐based subgroup as corporate directors who are members of the compensation committee, strong faultlines lead to higher CEO compensation. Furthermore, we show that joint tenure of directors and the CEO strengthens this relationship. Our results are robust to endogeneity concerns and a battery of sensitivity tests. Our findings make important contributions to the literature on CEO compensation, corporate governance and faultlines, as we consider not only the existence of faultlines in the board context but also how the composition of identity‐based subgroups affects CEO compensation.
期刊介绍：
The British Journal of Management provides a valuable outlet for research and scholarship on management-orientated themes and topics. It publishes articles of a multi-disciplinary and interdisciplinary nature as well as empirical research from within traditional disciplines and managerial functions. With contributions from around the globe, the journal includes articles across the full range of business and management disciplines. A subscription to British Journal of Management includes International Journal of Management Reviews, also published on behalf of the British Academy of Management.
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