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Public Opinion and Executive Compensation
TLDR
It is found that after more negative press coverage of CEO pay, firms reduce option grants and increase less contentious types of pay such as salary, although overall compensation does not change.Abstract:
We investigate whether public opinion influences the level and structure of executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most criticized pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase less contentious types of pay such as salary, while overall compensation does not change. The reduction in option pay after increased press negativity is more pronounced when firms, CEOs and boards have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion.read more
Citations
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The Information Content of Forward-Looking Statements in Corporate Filings-A Naïve Bayesian Machine Learning Approach: the information content of corporate filings
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Do Analysts Matter for Governance? Evidence from Natural Experiments
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Do ESG Controversies Matter for Firm Value? Evidence from International Data
Amal Aouadi,Sylvain Marsat +1 more
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The Evolving Disclosure Landscape: How Changes in Technology, the Media, and Capital Markets Are Affecting Disclosure
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Comparing automated text classification methods
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Performance Pay and Top Management Incentives
Kevin Murphy,Michael C. Jensen +1 more
TL;DR: For example, the authors estimates of the pay-performance relation (including pay, options, stockholdings, and dismissal) for chief executive officers indicate that CEO wealth changes $3.25 for every $1,000 change in shareholder wealth.