The effect of ceo pay deviations on ceo withdrawal, firm size, and firm profits

Eric A. Fong, Vilmos F. Misangyi, Henry L. Tosi

Research output: Contribution to journalArticlepeer-review

84 Scopus citations


We build upon previous work on the effects of deviations in CEO pay from labor markets to assess how overcompensation or undercompensation affects subsequent voluntary CEO withdrawal, firm size, and firm profitability, taking into account the moderating effect of firm ownership structure. We find that CEO underpayment is related to changes in firm size and CEO withdrawal, and that the relationship between CEO underpayment and CEO withdrawal is stronger in ownercontrolled firms. We also show that when CEOs are overpaid, there is higher firm profitability; a relationship that is weaker among manager-controlled firms. We then discuss the implications that these findings have for future research.

Original languageEnglish (US)
Pages (from-to)629-651
Number of pages23
JournalStrategic Management Journal
Issue number6
StatePublished - Jun 2010

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management


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