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Do common inherited beliefs and values influence CEO pay?

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  • Ellahie, Atif
  • Tahoun, Ahmed
  • Tuna, İrem

Abstract

We use the ethnicity of CEOs across 31 countries as a proxy for their common inherited beliefs and values and find an ethnicity effect in CEO variable pay. We find that the ethnicity effect in variable pay is not driven by the ethnicity effects in corporate policy decisions, and that changes in CEO compensation are significantly larger when CEOs are replaced with a person from a different ethnicity. Our estimated ethnicity effect captures the future time reference and religion of CEOs’ ancestors. Finally, we find an ethnicity effect in performance-firing sensitivities (i.e., the sensitivity to being fired due to poor performance).

Suggested Citation

  • Ellahie, Atif & Tahoun, Ahmed & Tuna, İrem, 2017. "Do common inherited beliefs and values influence CEO pay?," Journal of Accounting and Economics, Elsevier, vol. 64(2), pages 346-367.
  • Handle: RePEc:eee:jaecon:v:64:y:2017:i:2:p:346-367
    DOI: 10.1016/j.jacceco.2017.09.002
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    Cited by:

    1. Jung, Jay Heon & Kumar, Alok & Lim, Sonya S. & Yoo, Choong-Yuel, 2019. "An analyst by any other surname: Surname favorability and market reaction to analyst forecasts," Journal of Accounting and Economics, Elsevier, vol. 67(2), pages 306-335.
    2. Cohen, Lauren, 2017. "Discussion: Do common inherited beliefs and values influence CEO pay?," Journal of Accounting and Economics, Elsevier, vol. 64(2), pages 368-370.

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    More about this item

    Keywords

    Executive compensation; CEO characteristics; Ethnicity; Cultural persistence;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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