PI: Professor Raghavendra Rau (CJBS); Jenny Chu (CJBS)
Project Title: CEO Compensation consultants
Project Summary: There is currently a great deal of research on why CEOs are paid so much. A number of papers have argued that this is because of the ratchet effect – in that CEOs are paid highly because the firm chooses appropriate peer groups where the benchmark CEOs all get high salaries. Another argument is that this is because CEOs employ compensation consultants whose incentive is to make sure that their clients get higher salaries. Since 2006, firms have been required to disclose CEO peer groups and the identity of the consultant. While a few papers have looked at how the choice of the peer group affects pay, very few papers have examined the choice of compensation consultant.
Project Period: 1.9.2013-31.8.2014
Publication - The New York Times