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- Title
THE EFFECTS OF REGULATIONS ON EXECUTIVE COMPENSATION.
- Authors
Carroll, Thomas M.; Ciscel, David H.
- Abstract
Regulation has an effect on the rewards received by a firm's chief executive and on the pattern of those rewards. The differences are traceable to the types of regulation and to the levels of risk faced by different sectors. The consistency of the results, both on a year-to-year basis and with separate regulated and unregulated equations, provides a basis for the belief that these findings are not ephemeral. There are three parts to the findings. First, regulation substantially reduces the basic yearly remuneration of the chief executive in the regulated sectors of the economy. The reduction of financial risk, the narrowing of the range of executive discretion, plus subjecting executive salaries to governmental review may all explain the lower salaries in transportation and utilities. Second, the sales variable is consistently significant as an explanatory variable of the level of executive remuneration and is estimated to be of the same order of magnitude every year. Finally, the residual profits variable, a measure of technical efficiency, provides the most meaningful findings.
- Subjects
DELEGATED legislation; TRADE regulation; EXECUTIVE compensation; GOVERNMENT regulation; LABOR incentives; CHIEF executive officers; RISK assessment; WAGES; SALES management; CORPORATE profits
- Publication
Review of Economics & Statistics, 1982, Vol 64, Issue 3, p505
- ISSN
0034-6535
- Publication type
Article
- DOI
10.2307/1925951