Executive Compensation in Hungary: Do Managers Have a Role in Controlling Their Own Salaries?

Four years after the 2007-2008 financial meltdown, the general public remains outraged at the compensation received by top level executives. Complacency in placing compensation arrangements that do not serve the shareholders? interest have been heavily scrutinized, at least in the eye of the general public. This book aim to shed light on the nature of executive compensation in Hungary between 1994 and 2008. I divide the managers into two ranks, and through observing their various characteristics, I set forth to observe whether executive compensation can be explained accordingly, or whether there exist hints of managerial entrenchment. After using Ordinary Least Squares and Fixed Effects Estimation methods and conducting different robustness checks, I find that the forms of compensation used in this paper are not affected by common measures of firm size and performance, but only by gender status, human capital measures, and ownership type, which indicates that firm performance and firm size have no effect on executive compensation. This raises questions about the role of managers in controlling their own salaries through private benefits of control and managerial entrenchment.