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Executive pay : board reciprocity counts
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Godechot, Olivier, Horton, Joanne and Millo, Yuval (2022) Executive pay : board reciprocity counts. European Journal of Sociology, 63 (2). pp. 165-211. doi:10.1017/S0003975622000194 ISSN 0003-9756.
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Official URL: https://doi.org/10.1017/S0003975622000194
Abstract
We study the influence of the corporate board network on executive pay for 3,395 US firms between 1990 and 2015. We identify three elementary structures through which the interlocking network reflects forms of inter-group reciprocity across firms: restricted exchange, when two executives sit on each other’s respective boards; delayed exchange, when y sits on the board of x after the end of x’s mandate on the board of y; and generalized exchange, when x sits on the board of y, who sits on the board of z, who sits on the board of x. These ties, which are overrepresented, are related to higher executive pay, but are not related to firm performance, which we interpret as a form of rent extraction. We use the Sarbanes-Oxley Act (2002) as a natural experiment to confirm our results. The impact on pay disappears after 2004, once these types of exchanges are constrained.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HG Finance H Social Sciences > HM Sociology |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Executives -- Salaries, etc., Chief executive officers -- Salaries, etc., Executive ability -- United States | ||||||||
Journal or Publication Title: | European Journal of Sociology | ||||||||
Publisher: | Cambridge University Press | ||||||||
ISSN: | 0003-9756 | ||||||||
Official Date: | August 2022 | ||||||||
Dates: |
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Volume: | 63 | ||||||||
Number: | 2 | ||||||||
Page Range: | pp. 165-211 | ||||||||
DOI: | 10.1017/S0003975622000194 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Reuse Statement (publisher, data, author rights): | This article has been accepted for publication in a revised form for publication in European Journal of Sociology. Link to Journal’s site on cambridge.org. | ||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||
Copyright Holders: | © European Journal of Sociology, 2022 | ||||||||
Date of first compliant deposit: | 23 June 2021 | ||||||||
Date of first compliant Open Access: | 24 June 2021 | ||||||||
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