Doctoral Dissertations

Date of Award


Degree Type


Degree Name

Doctor of Philosophy


Business Administration

Major Professor

Michael C. Ehrhardt

Committee Members

Phillip R. Daves, Tracie M. Woidtke, Donald J. Bruce


A particular body of research examines the issue of linking executive pay to firm performance by focusing on the observation that CEO compensation varies widely across firms, even within the same industry. This research assumes that the same compensation model (i.e., structure of the model, explanatory variables, and coefficients on those variables) can be applied to all CEOs. If you will, extant research assumes a one-size-fits-all CEO compensation model approach to empirical analysis. Furthermore, much of this research also examines firm performance and similarly utilizes a one-size-fits-all firm performance model. I develop a proxy for CEO managerial power that I use to rank and classify CEOs into two groups: Elite CEOs (above a cut-off by the ranking) and Non-Elite CEOs (the remaining CEOs). As a note, I demonstrate that ranking the CEOs by my proxy for CEO managerial power is not the same as simply ranking the CEOs by their total direct compensation. My empirical results show that a one-size-fits-all model can be rejected. That is, the estimated coefficients in compensation models and firm performance models are different for Elite CEOs as compared to Non-Elite CEOs. Also, firms with Elite CEOs do not have higher performance. This suggests that Elite CEOs extract excessive compensation due to undue influence over their respective boards rather than to superior performance. These findings have both academic and corporate policy implications.

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