Are CEOs in Family Firms Paid Like Bureaucrats? Evidence from Bayesian and Frequentist Analyses

29 Pages Posted: 23 Apr 2008

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Date Written: April 2008

Abstract

The relationship between CEO pay and performance has been much analyzed in the management and economics literature. This study analyzes the structure of executive compensation in family and non-family firms. In line with predictions of agency theory, it is found that the share of base salary is higher with family-member CEOs than it is with non-family member CEOs. Furthermore, family-member CEOs receive a lower share of option pay. The paper's findings have implications for family business research and the executive compensation literature. To make the findings robust, the statistical analysis is performed with both Bayesian and classical frequentist methods.

Keywords: executive compensation, family firms, stock options, agency theory, Bayesian analysis

JEL Classification: G30, G34, J33, M52

Suggested Citation

Block, Jorn Hendrich, Are CEOs in Family Firms Paid Like Bureaucrats? Evidence from Bayesian and Frequentist Analyses (April 2008). Available at SSRN: https://ssrn.com/abstract=1123965 or http://dx.doi.org/10.2139/ssrn.1123965

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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