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A Priori Conceptions, Methodological Dogmatism and Theory versus Practice: three reasons why CEO pay research lacks convergence
Author(s) -
O'Neill Graham
Publication year - 2007
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2007.00598.x
Subject(s) - remuneration , executive compensation , convergence (economics) , shareholder , compensation (psychology) , a priori and a posteriori , value (mathematics) , shareholder value , accounting , positive economics , economics , psychology , management , business , social psychology , corporate governance , epistemology , computer science , finance , machine learning , economic growth , philosophy
Pay Without Performance: The Unfilled Promise of Executive Compensation by Lucian Bebchuk and Jesse Fried (Harvard University Press, 2004) challenges the view that executive remuneration arrangements are designed to maximise shareholder value. The authors argue that managerial power results in remuneration being structured to benefit executives at the expense of shareholders. This paper contends that Bebchuk and Fried's approach illustrates issues that contribute to the problematic nature of executive remuneration research. In particular, it is proposed that a priori conceptions about executive remuneration, methodological dogmatism in research approaches and a significant gap between theory and practice, each contribute to the lack of convergence in executive pay research. Illustrative data taken from interview‐based research conducted with Australian non‐executive directors supports the view that reliance on economic efficiency arguments alone does not provide a sufficient framework to explain the subjective, judgemental and socially interactive processes involved in determining executive pay.