第12回金融研究会を開催しました。

（論文要旨）

Contrary to predictions from prior literature, executive compensation still differs substantially across countries and does not seem to converge over time. However, recent literature on this is scarce and calls for additional research. Using compensation data for CEOs in 21 countries between 2010 and 2018, we provide a novel explanation for these differences and find a positive association between the degree of discretion available to CEOs across countries and the level of executive compensation. We also respond to the question prevalent in the literature of whether CEOs with more discretion receive higher compensation as a reward for their importance or because they are more able to extract rents from their firms. We exploit the fact that if the “reward” (“rent extraction”) explanation dominates, the performance sensitivity of executive compensation should increase (decrease) with discretion. Because we find a negative association between managerial discretion and the pay-for-performance sensitivity, our findings are consistent with the “rent extraction” explanation. Consistent with theoretical predictions, we also find that our results are attributable to low-performing CEOs in highdiscretion countries that appear to make use of their discretion to increase their compensation. In addition, we find that our results are more pronounced for CEOs with larger deferred compensation packages, indicating that CEOs use deferred compensation in particular as a channel to extract rents from their firms.

Keywords:Compensation; Managerial Discretion; Cross-Country