Other People's Money: The Effects of Ownership on Compensation Strategy and Managerial Pay

This study analyzes the compensation strategy of firms. We examined differences in the pay and incentives of lower-level managers in firms with different levels of management discretion. We found that firms with higher managerial discretion paid compensation premiums through higher salaries, greater bonuses, and more long-term incentives; however, changes in pay were not related to changes in performance, and high-discretion firms did not perform better than other types of firms