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Money isn't everything: Compensation of locally educated executives

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  • Bick, Patty
  • Flugum, Ryan

Abstract

We identify the location of an executive's undergraduate university education as a proxy for their geographic preference. Executives whose university education took place near a firm's headquarters are paid 4.40% to 11.01% less than their peers, suggesting the transparency of university education allows firms to use the location of their headquarters as a form of intangible compensation. This geographic preference discount persists across all levels of the C-Suite, corporate governance quality, time periods, and after controlling for opaque measures of where the executive grew up. Our study shows the location of an executive's undergraduate university is a consequential component of his or her geographic preference, and that such preference has meaningful implications for his or her compensation.

Suggested Citation

  • Bick, Patty & Flugum, Ryan, 2022. "Money isn't everything: Compensation of locally educated executives," Journal of Corporate Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:corfin:v:74:y:2022:i:c:s0929119922000554
    DOI: 10.1016/j.jcorpfin.2022.102212
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    More about this item

    Keywords

    Executive compensation; Managerial incentives; Geographic preference discount;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • 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
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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