Advanced Search
MyIDEAS: Login to save this paper or follow this series

Public opinion and executive compensation

Contents:

Author Info

  • Kuhnen, Camelia M.
  • Niessen, Alexandra

Abstract

We inquire whether public opinion influences executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most discussed pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase other compensation including stock awards, overall reducing pay-to-performance sensitivity. The reduction in option pay after increased press negativity is more pronounced when firms and CEOs have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion. --

Download Info

If 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.
File URL: http://econstor.eu/bitstream/10419/69237/1/735594988.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 08-09 [rev.].

as in new window
Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:zbw:cfrwps:0809r

Contact details of provider:
Postal: Albertus Magnus Platz, 50923 Köln
Phone: 0221 / 470 5607
Fax: 0221 / 470 5179
Email:
Web page: http://cfr-cologne.de/english/version06/html/home.php
More information through EDIRC

Related research

Keywords: executive compensation; public opinion; social norms; media coverage;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Luigi Zingales, 2000. "In Search of New Foundations," NBER Working Papers 7706, National Bureau of Economic Research, Inc.
  2. Bengt Holmstrom & Steven N. Kaplan, 2003. "The State Of U.S. Corporate Governance: What'S Right And What'S Wrong?," Journal of Applied Corporate Finance, Morgan Stanley, Morgan Stanley, vol. 15(3), pages 8-20.
  3. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance And Equity Prices," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 107-155, February.
  4. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers, Institute for Fiscal Studies W95/17, Institute for Fiscal Studies.
  5. Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(2), pages 225-64, April.
  7. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers, Rochester, Business - Managerial Economics Research Center 88-05, Rochester, Business - Managerial Economics Research Center.
  8. Gregory S. Miller, 2006. "The Press as a Watchdog for Accounting Fraud," Journal of Accounting Research, Wiley Blackwell, Wiley Blackwell, vol. 44(5), pages 1001-1033, December.
  9. Heron, Randall A. & Lie, Erik, 2007. "Does backdating explain the stock price pattern around executive stock option grants?," Journal of Financial Economics, Elsevier, Elsevier, vol. 83(2), pages 271-295, February.
  10. Lucian Bebchuk & Alma Cohen & Allen Ferrell, 2009. "What Matters in Corporate Governance?," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 22(2), pages 783-827, February.
  11. 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.
  12. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, American Finance Association, vol. 62(3), pages 1139-1168, 06.
  13. Yermack, David, 1997. " Good Timing: CEO Stock Option Awards and Company News Announcements," Journal of Finance, American Finance Association, American Finance Association, vol. 52(2), pages 449-76, June.
  14. Dyck, Alexander & Volchkova, Natalya & Zingales, Luigi, 2007. "The Corporate Governance Role of the Media: Evidence from Russia," Working Papers, University of Pennsylvania, Wharton School, Weiss Center 07-1, University of Pennsylvania, Wharton School, Weiss Center.
  15. Ilona Babenko, 2009. "Share Repurchases and Pay-Performance Sensitivity of Employee Compensation Contracts," Journal of Finance, American Finance Association, American Finance Association, vol. 64(1), pages 117-150, 02.
  16. Bebchuk, Lucian Arye & Fried, Jesse & Walker, David I, 2002. "Managerial Power and Rent Extraction in the Design of Executive Compensation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3558, C.E.P.R. Discussion Papers.
  17. Robert Gibbons & Kevin J. Murphy, 1991. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," NBER Working Papers 3792, National Bureau of Economic Research, Inc.
  18. Jay C. Hartzell & Laura T. Starks, 2003. "Institutional Investors and Executive Compensation," Journal of Finance, American Finance Association, American Finance Association, vol. 58(6), pages 2351-2374, December.
  19. Core, John E. & Guay, Wayne & Larcker, David F., 2008. "The power of the pen and executive compensation," Journal of Financial Economics, Elsevier, Elsevier, vol. 88(1), pages 1-25, April.
  20. John Asker & Alexander Ljungqvist, 2010. "Competition and the Structure of Vertical Relationships in Capital Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 118(3), pages 599-647, 06.
  21. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 29-51, July.
  22. Michael L. Lemmon & Michael R. Roberts & Jaime F. Zender, 2008. "Back to the Beginning: Persistence and the Cross-Section of Corporate Capital Structure," Journal of Finance, American Finance Association, American Finance Association, vol. 63(4), pages 1575-1608, 08.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Janto Haman & Hristos Doucouliagos & Michael Graham, 2012. "Agency Problem II and Convergence in CEO Pay," Economics Series 2012_5, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Mohamed Khenissi & Peter Wirtz, 2013. "Processus Decisionnel En Matiere De Remuneration Des Dirigeants : Le Cas Vinci," Working Papers halshs-00850083, HAL.
  3. Pablo Ruiz-Verdú & Ravi Singh, 2014. "Board Independence, CEO Pay, and Camouflaged Compensation," Business Economics Working Papers, Universidad Carlos III, Departamento de Economía de la Empresa wb140704, Universidad Carlos III, Departamento de Economía de la Empresa.
  4. repec:eee:jebusi:v:67:y:2013:i:c:p:67-76 is not listed on IDEAS

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:cfrwps:0809r. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.