US CEOs engage in rent-seeking and exploit corporate governance to increase compensation
the verdict
SUPPORTED
the evidence backs this
confidence 68/100
Substantial empirical literature and meta-analyses support the conclusion that US CEOs often leverage managerial power and weaknesses in corporate governance to extract rents and increase their compensation.
Evidence for · 4
Superstar CEOs<sup>*</sup>
2009 · cited by 695
Shows that CEOs receiving prestigious awards subsequently underperform while extracting more compensation, particularly in firms with weak corporate governance.
Evidence against · 1
A Multiplicative Model of Optimal CEO Incentives in Market Equilibrium
2008 · cited by 603
Demonstrates that low fractional ownership and pay structures can be reconciled with optimal contracting rather than necessarily reflecting rent extraction.
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More for · 3
Assessing Managerial Power Theory
2012 · cited by 337
A meta-analysis indicating that managerial power is strongly predictive of higher levels of CEO total cash and total compensation.
Managerial Power and Rent Extraction in the Design of Executive Compensation
2002 · cited by 333
Argues that executives use managerial power to influence their own pay and extract rents rather than operating under strict optimal contracting.
Managerial Power and Rent Extraction in the Design of Executive Compensation
2002 · cited by 210
Provides foundational evidence that managerial power and rent extraction significantly shape executive compensation packages.