|Title||CEO Pay Inequity, CEO-TMT Pay Gap, and Acquisition Premiums |
|Publication Type||Journal Articles |
|Year of Publication||2019 |
|Authors||Lee, G, Cho, SYul, Arthurs, J, Lee, EKyung |
|Journal||Journal of Business Research |
|Date Published||2019 |
|Keywords||Doctoral Program, MBA, Strategy & Entrepreneurship |
This study extends previous research on the influence of CEO pay inequity on CEOs' decision-making by examining the relationship in the acquisition context. Focusing on CEOs' compensation vis-à-vis external and internal referents, we find that underpaid CEOs pay higher acquisition premiums and that overpaid CEOs pay lower premiums, although this tendency is reduced as the level of overpayment increases, creating a U-shaped relationship. We further find that the CEO-TMT pay gap moderates the relationship between CEO under-/overpayment and acquisition premiums by adjusting CEOs' perceptions of pay inequity and motivation to restore inequity through their higher or lower sense of self-importance. The findings of this study suggest that CEOs' decision-making is strongly influenced by their framing of gains and losses and the perception of pay inequityvis-à-vis external and internal referents.