CEO Pay Inequity, CEO-TMT Pay Gap, and Acquisition Premiums
- Authors
- Lee, Gilsoo; Cho, Sam Yul; Arthurs, Jonathan; Lee, Eun Kyung
- Issue Date
- Jan-2019
- Publisher
- Elsevier BV
- Keywords
- Acquisition premiums; CEO compensation; CEO overpayment; CEO underpayment; CEO-TMT pay gap
- Citation
- Journal of Business Research, v.98, pp 105 - 116
- Pages
- 12
- Indexed
- SSCI
SCOPUS
- Journal Title
- Journal of Business Research
- Volume
- 98
- Start Page
- 105
- End Page
- 116
- URI
- https://scholarworks.bwise.kr/erica/handle/2021.sw.erica/114015
- DOI
- 10.1016/j.jbusres.2019.01.023 Get rights and content
- ISSN
- 0148-2963
- Abstract
- This study extends previous research on the influence of CEO pay inequity on CEOs' decision-making by examining the relationship in the acquisition context. Focusing on CEOs' compensation vis-à-vis external and internal referents, we find that underpaid CEOs pay higher acquisition premiums and that overpaid CEOs pay lower premiums, although this tendency is reduced as the level of overpayment increases, creating a U-shaped relationship. We further find that the CEO-TMT pay gap moderates the relationship between CEO under-/overpayment and acquisition premiums by adjusting CEOs' perceptions of pay inequity and motivation to restore inequity through their higher or lower sense of self-importance. The findings of this study suggest that CEOs' decision-making is strongly influenced by their framing of gains and losses and the perception of pay inequity vis-à-vis external and internal referents.
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