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CEO pay and family firm heterogeneity: A behavioral agency model perspective

Lookup NU author(s): Dr Shams PathanORCiD

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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).


Abstract

© The Author(s) 2021. We study the effects of family control on CEO pay from the perspective of behavioral agency model (BAM), with particular focus on family firm’s generational stage and CEO family ties. Using a panel of Australian listed firms, we find that family firms present lower total and variable CEO pay, showing also less pay disparity between the CEO and other top executives. We also find that multi-generational family firms and those run by non-family CEOs offer higher total and variable CEO pay and present high pay disparity. The BAM and family’s aversion to socioemotional wealth loss can explain the effects of family control based on the pursuing of non-financial family goals. The decline of these goals derived from the aging of the firm and the hiring of external CEOs shape family control and should be considered in the design of executive compensation policies and by external parties when assessing their suitability. JEL CLASSIFICATION: G30; G32; G34; G38


Publication metadata

Author(s): Fernandez Mendez C, Arrondo Garcia R, Pathan S

Publication type: Article

Publication status: Published

Journal: BRQ Business Research Quarterly

Year: 2021

Pages: Epub ahead of print

Online publication date: 28/10/2021

Acceptance date: 02/04/2018

Date deposited: 20/12/2023

ISSN (print): 2340-9436

ISSN (electronic): 2340-9444

Publisher: SAGE Publications Inc.

URL: https://doi.org/10.1177/23409444211051754

DOI: 10.1177/23409444211051754


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Funding

Funder referenceFunder name
Ministerio de Ciencia e Innovación
PID2019-108503RB-I00

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