Scandinavian Working Papers in Business Administration
Working Paper Series,
Lund University, Institute of Economic Research
No 2002/4: The Effect of Internationalization On CEO-Compensation
Lars Oxelheim () and Trond Randøy ()
Additional contact information
Lars Oxelheim: Department of Business Administration, School of Economics and Management, Lund University, Postal: Department of Business Administration, School of Economics and Management, Lund University, Box 7080, SE-220 07 Lund, Sweden
Trond Randøy: School of management Agder University College, Postal: School of management Agder University College, Bygg H, Serviceboks 422, N-4604, Kristiansand, Norway
Abstract: This study addresses how firms’ internationalization affects CEO compensation. Based on a sample of Swedish listed firms we analyze the effect of internationalization through the product market (export), the capital market (foreign exchange listing), and the corporate governance market (foreign board membership). We find that internationalization with respect to the capital market and the corporate governance market strengthens the relationship between product market internationalization and CEO compensation. A higher degree of internationalization - via the capital and corporate governance markets - is found to be associated with shorter CEO tenure. We argue that part of the higher CEO compensation in international oriented firms reflects a risk premium for harsher monitoring and thus lower job security.
Keywords: CEO compensation; internationalization; corporate governance; Sweden
21 pages, December 17, 2002
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