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CEO earnings: Evidence from Danish twins

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  • Conyon, Martin
  • Jeong, Juyeong
  • Thomsen, Steen

Abstract

We estimate the CEO earnings premium using Danish twin data. Ordinary least squares indicate CEOs earn 59.5% more than comparable non-CEOs. Controlling for twin-pair and firm fixed effects, which capture shared family, genetic, and workplace factors, reduces the premium substantially to 15.9%. A series of sensitivity analyses — varying income definitions, sample restrictions, firm-size interactions, and environmental controls — confirm that this reduced premium remains robust. These results suggest that a significant portion of the CEO earnings gap is explained by unobserved background factors rather than by the causal effect of CEO status itself.

Suggested Citation

  • Conyon, Martin & Jeong, Juyeong & Thomsen, Steen, 2025. "CEO earnings: Evidence from Danish twins," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525003994
    DOI: 10.1016/j.econlet.2025.112562
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    References listed on IDEAS

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    1. Bennett, Patrick, 2018. "The heterogeneous effects of education on crime: Evidence from Danish administrative twin data," Labour Economics, Elsevier, vol. 52(C), pages 160-177.
    2. Martin J. Conyon & John E. Core & Wayne R. Guay, 2011. "Are U.S. CEOs Paid More Than U.K. CEOs? Inferences from Risk-adjusted Pay," The Review of Financial Studies, Society for Financial Studies, vol. 24(2), pages 402-438.
    3. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    4. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-1173, December.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008. "Income and Democracy," American Economic Review, American Economic Association, vol. 98(3), pages 808-842, June.
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    Keywords

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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