Gomez-Mejia, Luis R.; Tosi, Henry; Hinkin, Timothy
March 1987
Academy of Management Journal;Mar1987, Vol. 30 Issue 1, p51
Academic Journal
Using a sample of 71 very large manufacturers, this study demonstrated that executives in externally controlled firms receive more compensation for performance and less for scale of operation than their counterparts in firms without dominant stockholders. This finding held true for both compensation level and its rate of change over time. Our main conclusion is that outside dominant stockholders view firms primarily as investments and have the power and the incentive to align the compensation of hired CEOs with performance of firms.


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