Journal
STRATEGIC MANAGEMENT JOURNAL
Volume 35, Issue 12, Pages 1853-1866Publisher
WILEY-BLACKWELL
DOI: 10.1002/smj.2267
Keywords
chief financial officer; human capital; executive education quality; generalist vs. specialist skills; upper echelon executive compensation; top management team (TMT); CFO labor market
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This study extends current knowledge of upper echelon executive compensation beyond the CEO, specifically CFO compensation, based on whether they possess generalist or specialist skills. We find that strategic CFOs with an elite MBA (generalist) consistently command a compensation premium, while accounting CFOs (specialist) and CFOs with a non-MBA master's degree, even from an elite institution, do not. Further, scarce strategic CFOs are awarded both higher salaries and higher equity-based compensation. Our findings support the view that unique complementarities between scarce CFOs and firms increase these executives' bargaining power leading to pay premium. Our results are robust to post-hiring years, firm sizes, board characteristics, and CFO's insider/outsider status. We contribute at the confluence of upper-echelon compensation, executive human capital, resource-based view, and assortative matching literatures. Copyright (C) 2014 John Wiley & Sons, Ltd.
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