Compensation structure of family business groups

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We examine executive compensation structures with a focus on family business groups in Korea. Our results show that Korean family business groups provide 60% more total compensation to CEOs who are family members than to professional CEOs. This excessive increment is not based on performance-contingent payments, but on fixed payments. Our propensity score matching and difference-in-differences analyses robustly support these results. Further, we find that operation of internal capital markets, CEO talents, CEO stock ownership, and family board membership do not explain the excessive compensation of family CEOs in family business groups. The evidence indicates rent extraction through executive compensation in family business groups.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2018-10
Language
English
Article Type
Article
Keywords

EXECUTIVE-COMPENSATION; CORPORATE GOVERNANCE; CEO COMPENSATION; FIRM PERFORMANCE; KOREA; MANAGEMENT; OWNERSHIP; CRISIS; CHINA

Citation

PACIFIC-BASIN FINANCE JOURNAL, v.51, pp.376 - 391

ISSN
0927-538X
DOI
10.1016/j.pacfin.2018.09.002
URI
http://hdl.handle.net/10203/246533
Appears in Collection
RIMS Journal Papers
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