Purpose

This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem.

Design/methodology/approach

The author uses a sample of 7,280 firm-year observations from 1998 to 2011.

Findings

In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem.

Originality/value

The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

中文翻译：

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薪酬委员会能否有效缓解CEO的视野问题？增选董事的角色

目的

这项研究旨在检验由增选董事主导的薪酬委员会在缓解CEO视野问题方面是否较不有效。

设计/方法/方法

作者使用了从1998年到2011年的7,280个公司年观测值的样本。

发现

在这项研究中，作者发现了在以退休董事和由补选董事为主导的薪酬委员会的公司中，减少机会研究与开发（R＆D）和权责发生制管理的证据。此外，还发现，在由增选董事主导的薪酬委员会确定退休首席执行官的薪酬时，不鼓励减少研发支出和增加应计收入。结果表明，以增选董事为主导的薪酬委员会在调整CEO薪酬以减轻CEO视野问题方面效果不佳。

创意/价值

该研究表明，增选董事是弱势监督者。此外，该研究为有关组织的首席执行官视野问题的辩论提供了经验证据。最后，该研究增加了有关公司治理的文献，揭示了薪酬委员会在通过调整CEO薪酬来缓解组织的CEO视野问题中发挥着重要作用。