TY - JOUR
T1 - An empirical investigation of the role of subjective performance assessments versus objective performance indicators as determinants of ceo compensation
AU - Caranikas-Walker, Fanny
AU - Goel, Sanjay
AU - Gómez-Mejía, Luis R.
AU - Cardy, Robert L.
AU - Rundell, Arden Grabke
PY - 2008
Y1 - 2008
N2 - The empirical support for agency theory explanations for the great variance in CEO pay has been equivocal. Drawing from the performance appraisal literature, we hypothesize that boards of directors incorporate human judgment into the evaluation and reward of CEO performance in order to balance managerial risk with agency costs. We test Baysinger and Hoskisson’s (1990) proposition that insider-dominated corporate boards rely on subjective performance evaluation to reward the CEO, and we argue that R&D intensity influences this relationship. Using a sample of Fortune firms, findings support our contention that human judgment is important in evaluating and rewarding CEO performance.
AB - The empirical support for agency theory explanations for the great variance in CEO pay has been equivocal. Drawing from the performance appraisal literature, we hypothesize that boards of directors incorporate human judgment into the evaluation and reward of CEO performance in order to balance managerial risk with agency costs. We test Baysinger and Hoskisson’s (1990) proposition that insider-dominated corporate boards rely on subjective performance evaluation to reward the CEO, and we argue that R&D intensity influences this relationship. Using a sample of Fortune firms, findings support our contention that human judgment is important in evaluating and rewarding CEO performance.
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U2 - 10.2753/JMR1536-5433060101
DO - 10.2753/JMR1536-5433060101
M3 - Article
AN - SCOPUS:79953060151
SN - 1536-5433
VL - 6
SP - 7
EP - 25
JO - Management Research
JF - Management Research
IS - 1
ER -