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What Do Unions Do to Executive Compensation?

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  • Rafael Gomez
  • Konstantinos Tzioumis

Abstract

We estimate the relation between union presence and executive compensation using a unique panel of executives in publicly listed US firms during the period 1992-2001. We find evidence that union presence is associated with lower levels of total executive compensation. We find this union effect to be primarily the result of substantially lower stock option awards, and to a lesser extent due to lower cash pay. Moreover, the negative relation between unionization and executive remuneration becomes larger at the higher end of the conditional distribution of executive remuneration. We also find that the elasticity of cash pay to financial performance is similar across unionized and non-unionized firms, and that union presence is associated with a more compressed intra-firm and inter-firm executive compensation structure.

Suggested Citation

  • Rafael Gomez & Konstantinos Tzioumis, 2006. "What Do Unions Do to Executive Compensation?," CEP Discussion Papers dp0720, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0720
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Unions & productivity
      by chris dillow in Stumbling and Mumbling on 2014-07-11 17:42:27
    2. Against marginal product
      by chris in Stumbling and Mumbling on 2017-04-16 17:31:38
    3. "Values" and the crisis of social democracy
      by chris dillow in Stumbling and Mumbling on 2011-09-30 18:05:50
    4. Inequality and ideology
      by chris dillow in Stumbling and Mumbling on 2006-08-22 17:25:02

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    Cited by:

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    7. Kuhnen, Camelia M. & Niessen-Ruenzi, Alexandra, 2008. "Is Executive Compensation Shaped by Public Attitudes?," CFR Working Papers 08-09, University of Cologne, Centre for Financial Research (CFR).
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    More about this item

    Keywords

    Unions; executive compensation; Implicit regulation;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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