Political economy and corporate governance : political connection of board directors and political moderation of CEO-wages in Norwegian state-owned companies

Abstract

This thesis examines the relationship between political connection of board directors and CEO-wages in 27 Norwegian state-owned companies and enterprises in 2000-2010. I hypothesize that political connected directors possessing a “political rationale” moderates CEO-wages, because excess CEO-wages are prone to public critiques which gives bad reputation for the politicians. Further I hypothesize that political connected directors with background from right parties (H, FrP) will have a less moderating effect compared to leftist board directors. Finally, I extend first hypothesis and state that political connectedness and political moderation of CEO-wages has a stronger effect in commercial companies. Main findings shows that there is weak support of political influence on CEO-wages and that there are no strong ideological preferences. However, the results shows some albeit weak moderating effect in commercial companies. Another finding is that rightist board directors tend to contribute to an increase in CEO-wages in non-commercial (monopoly) companies. Presumably, this is because of the understanding in the complex of managing such companies, thus rewarding CEOs.