Explicit employment contracts and CEO compensation

Wei-Ling Song, Kam Ming Wan*

*Motsvarande författare för detta arbete

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6 Citeringar (Scopus)


This study investigates the relation between the use of explicit employment agreements (EA) and CEO compensation. Overall, our findings are broadly consistent with the predictions of Klein, Crawford, and Alchian (1978) that an EA is used to induce CEOs to make firm-specific human capital investments that are vulnerable to opportunistic behavior. We determine that compensation is higher when CEOs have employment agreements that are written, longer in duration, or more explicit in terms. Additionally, such employment agreements are more likely to occur when firms have (i) externally hired CEOs, (ii) CEOs with large abnormal compensation, (iii) low investment intensity, (iv) low growth opportunities, and (v) CEOs with a short employment history with the firm.

Referentgranskad vetenskaplig tidskriftJournal of Corporate Finance
Sidor (från-till)540-560
Antal sidor21
StatusPublicerad - 01.06.2017
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift


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