Distributive Justice and CEO Compensation
AbstractThis paper develops a framework for studying individuals’ ideas about what constitutes just compensation for chief executive officers (CEOs) and reports estimates of just CEO pay and the principles guiding ideas of justice. The sample consists of students pursuing a Master of Business Administration (MBA) degree in Sweden and the United States. The framework, based on justice theory and making use of Rossi’s factorial survey method, enables assessment of ideas of fairness in CEO compensation, including (1) the just CEO compensation, in the eyes of each observer; (2) the principles of microjustice – observers’ ideas about “who should get what” based on characteristics of CEOs and their firms; and (3) principles of macrojustice – ideas about the just level and dispersion in compensation across all CEOs. Our estimates yield the following main results: First, there is broad agreement on the median just CEO compensation but substantial inter-individual variation in the principles of microjustice and the other principles of macrojustice. Second, there is remarkable similarity in the distributions of the principles of microjustice and macrojustice across the MBA groups. Other important results include a pervasive gender attentiveness among MBA students and tolerance for large variability in CEO pay.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3236.
Length: 37 pages
Date of creation: Dec 2007
Date of revision:
Publication status: published in: Acta Sociologica, 2008, 51 (2), 123-143
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Guillermina Jasso & Eva M. Meyersson Milgrom, 2006. "Distributive Justice and CEO Compensation," Discussion Papers, Stanford Institute for Economic Policy Research 05-020, Stanford Institute for Economic Policy Research.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D6 - Microeconomics - - Welfare Economics
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-12 (All new papers)
- NEP-BEC-2008-01-12 (Business Economics)
- NEP-LAB-2008-01-12 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas Piketty & Emmanuel Saez, 2006.
"The Evolution of Top Incomes: A Historical and International Perspective,"
American Economic Review, American Economic Association,
American Economic Association, vol. 96(2), pages 200-205, May.
- Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," NBER Working Papers 11955, National Bureau of Economic Research, Inc.
- Arts, Wil & Hermkens, Piet & van Wijck, Peter, 1991. "Income and the idea of justice: principles, judgments, and their framing/s," Journal of Economic Psychology, Elsevier, Elsevier, vol. 12(1), pages 121-140, March.
- Brian J. Hall & Jeffrey B. Liebman, 1997.
"Are CEOs Really Paid Like Bureaucrats?,"
NBER Working Papers
6213, National Bureau of Economic Research, Inc.
- Roine, Jesper & Waldenstrom, Daniel, 2008.
"The evolution of top incomes in an egalitarian society: Sweden, 1903-2004,"
Journal of Public Economics, Elsevier,
Elsevier, vol. 92(1-2), pages 366-387, February.
- Roine, Jesper & WaldenstrÃ¶m, Daniel, 2006. "The Evolution of Top Incomes in an Egalitarian Society: Sweden, 1903â€“2004," Working Paper Series in Economics and Finance 625, Stockholm School of Economics.
- Roine, Jesper & WaldenstrÃ¶m, Daniel, 2006. "The Evolution of Top Incomes in an Egalitarian Society; Sweden, 1903â€“2004," Working Paper Series, Research Institute of Industrial Economics 667, Research Institute of Industrial Economics.
- Sherwin Rosen, 1990. "Contracts and the Market for Executives," NBER Working Papers 3542, National Bureau of Economic Research, Inc.
- Conyon, Martin J & Murphy, Kevin J, 2000. "The Prince and the Pauper? CEO Pay in the United States and United Kingdom," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(467), pages F640-71, November.
- Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
- Andreas Kuhn, 2010. "The Public Perception and Normative Valuation of Executive Compensation: An International Comparison," NRN working papers 2010-13, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- RÃ¼ya KoÃ§er & Herman Werfhorst, 2012. "Education systems and the formation of societal consensus on justice," Quality & Quantity: International Journal of Methodology, Springer, Springer, vol. 46(2), pages 451-470, February.
- Edi Karni & Zvi Safra, 2003. "Moral Sentiments and Social Choice: Fairness Considerations in University Admissions," Economics Working Paper Archive, The Johns Hopkins University,Department of Economics 492, The Johns Hopkins University,Department of Economics.
- Carsten Sauer & Stefan Liebig & Katrin Auspurg & Thomas Hinz & Andy Donaubauer & JÃ¼rgen Schupp, 2009.
"A Factorial Survey on the Justice of Earnings within the SOEP-Pretest 2008,"
SOEPpapers on Multidisciplinary Panel Data Research
238, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Sauer, Carsten & Liebig, Stefan & Auspurg, Katrin & Hinz, Thomas & Donaubauer, Andy & Schupp, Jürgen, 2009. "A Factorial Survey on the Justice of Earnings within the SOEP-Pretest 2008," IZA Discussion Papers 4663, Institute for the Study of Labor (IZA).
- Edi Karni & Zvi Safra, 2008. "Moral sentiments and social choice," Social Choice and Welfare, Springer, Springer, vol. 30(3), pages 427-446, April.
- repec:iab:iabzaf:v:40:i:1:p:9-22 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.