CIO Compensation Following the Sarbanes-Oxley Act

• In Event: Internal Controls

Abstract

A dramatic growth in the demand for Chief Information Officer spurred by the Sarbanes-Oxley Act of 2002 and the recent IT spending recovery has led to a steady increase in CIO compensation over the last decade. Consequently, it has become challenging for firms to attract and retain a CIO with desired ability. Extant executive compensation literature focuses on CEOs and CFOs whose incentives and contracts are different from that of CIOs. First, this study examines the association between CIO compensation and firm financial performance measures. Second, we identify which CIO educational background (Technical and Non-technical) is associated with a higher pay. Third, we investigate how the higher pay on educational background is moderated by strategic profiles (from prospectors to defenders) and institutional factors (firm size and information-intensity) as a first step towards understanding the structure of optimal CIO compensation contracts.

Authors

• Rajiv D Banker, Temple University

• Cecilia Qian Feng, Temple University

• Paul Pavlou, Temple University