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
Date Written: July 19, 2012
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: Suggested Citation