European differences in executive pay andcorporate governance

Abstract

This paper examines the level and stmcture of executive pay across a sample of European economies in the mid- 1990s. Our results indicate that there are significant differences in executive pay across Europe which are explained in large part by the particular job position and Company size. However, after Controlling for these factors we find that country specific effects are important in executive pay determination. Our cross section results indicate that country effects on pay are not wholly eradicated by the effects of the internationalisation of capital and labour markets through factor price equalisation. The effects of different board structures on executive pay turns out to be ambiguous in our sample.