Beyond Agency Theory: A Three-Paradigm Approach to Executive Compensation

The IUP Journal of Corporate Governance, Vol. X, No. 4, pp. 7-36, October 2011

Posted: 19 Jul 2012

See all articles by Xavier Baeten

Xavier Baeten

Vlerick Leuven Gent Management School

David B. Balkin

University of Colorado at Boulder - Leeds School of Business

Lutgart Van den Berghe

Vlerick Leuven Gent Management School

Date Written: July 19, 2012

Abstract

Executive compensation has an extensive research history. Although agency theory is an important theoretical framework used in this research, the failure to find a link between performance and compensation has stimulated the development and application of other theoretical lenses originating in diverse management disciplines. This paper proposes three main paradigms underlying theories on executive compensation - control, social-psychological and fit paradigms. It then allocates 18 theories mentioned in research on executive compensation to each of these paradigms and discusses the implications. The resulting synthesis provides new insights for research and practice in the field of executive compensation.

Suggested Citation

Baeten, Xavier and Balkin, David B. and Berghe, Lutgart Van den, Beyond Agency Theory: A Three-Paradigm Approach to Executive Compensation (July 19, 2012). The IUP Journal of Corporate Governance, Vol. X, No. 4, pp. 7-36, October 2011, Available at SSRN: https://ssrn.com/abstract=2112808

Xavier Baeten (Contact Author)

Vlerick Leuven Gent Management School ( email )

Library
REEP 1
Gent, BE-9000
Belgium

David B. Balkin

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States
303-492-5780 (Phone)

Lutgart Van den Berghe

Vlerick Leuven Gent Management School ( email )

Library
REEP 1
Gent, BE-9000
Belgium

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