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The Price of a CEO's Rolodex

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  • Joseph Engelberg
  • Pengjie Gao
  • Christopher A. Parsons

Abstract

CEOs with large networks earn more than those with small networks. An additional connection to an executive or director outside the firm increases compensation by about $17,000 on average, more so for "important" members, such as CEOs of big firms. Pay-for-connectivity is unrelated to several measures of corporate governance, evidence in favor of an efficient contracting explanation for CEO pay. The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Suggested Citation

  • Joseph Engelberg & Pengjie Gao & Christopher A. Parsons, 2013. "The Price of a CEO's Rolodex," Review of Financial Studies, Society for Financial Studies, vol. 26(1), pages 79-114.
  • Handle: RePEc:oup:rfinst:v:26:y:2013:i:1:p:79-114
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    Cited by:

    1. Christopher A. Parsons & Johan Sulaeman & Sheridan Titman, 2014. "The Geography of Financial Misconduct," NBER Working Papers 20347, National Bureau of Economic Research, Inc.
    2. Pham, Nga & Oh, K.B. & Pech, Richard, 2015. "Mergers and acquisitions: CEO duality, operating performance and stock returns in Vietnam," Pacific-Basin Finance Journal, Elsevier, pages 298-316.
    3. El-Khatib, Rwan & Fogel, Kathy & Jandik, Tomas, 2015. "CEO network centrality and merger performance," Journal of Financial Economics, Elsevier, vol. 116(2), pages 349-382.
    4. Fuchs, Florian & Fuess, Roland & Jenkinson, Tim & Morkoetter, Stefan, 2017. "Winning a Deal in Private Equity: Do Educational Networks Matter?," Working Papers on Finance 17155, University of St. Gallen, School of Finance.
    5. repec:eee:corfin:v:44:y:2017:i:c:p:193-214 is not listed on IDEAS
    6. Gao, Huasheng & Luo, Juan & Tang, Tilan, 2015. "Effects of managerial labor market on executive compensation: Evidence from job-hopping," Journal of Accounting and Economics, Elsevier, vol. 59(2), pages 203-220.
    7. Javakhadze, David & Ferris, Stephen P. & French, Dan W., 2016. "Social capital, investments, and external financing," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 38-55.
    8. Larcker, David F. & So, Eric C. & Wang, Charles C.Y., 2013. "Boardroom centrality and firm performance," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 225-250.
    9. Quoc-Anh Do & Yen-Teik Lee & Bang Dang Nguyen, 2016. "Directors as Connectors: The Impact of the External Networks of Directors on Firms," Sciences Po publications 52, Sciences Po.
    10. Buss, Adrian & Dumas, Bernard & Uppal, Raman & Vilkov, Grigory, 2016. "The intended and unintended consequences of financial-market regulations: A general-equilibrium analysis," Journal of Monetary Economics, Elsevier, pages 25-43.
    11. repec:eee:corfin:v:45:y:2017:i:c:p:401-427 is not listed on IDEAS
    12. Newton, Ashley N., 2015. "Executive compensation, organizational performance, and governance quality in the absence of owners," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 195-222.
    13. Cooney, John W. & Madureira, Leonardo & Singh, Ajai K. & Yang, Ke, 2015. "Social ties and IPO outcomes," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 129-146.
    14. repec:eee:corfin:v:45:y:2017:i:c:p:220-244 is not listed on IDEAS
    15. Liu, Yun, 2014. "Outside options and CEO turnover: The network effect," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 201-217.
    16. repec:eee:corfin:v:47:y:2017:i:c:p:46-71 is not listed on IDEAS

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