Money isn't everything: Compensation of locally educated executives

Patty Bick and Ryan Flugum

Journal of Corporate Finance, 2022, vol. 74, issue C

Abstract: We identify the location of an executive's undergraduate university education as a proxy for their geographic preference. Executives whose university education took place near a firm's headquarters are paid 4.40% to 11.01% less than their peers, suggesting the transparency of university education allows firms to use the location of their headquarters as a form of intangible compensation. This geographic preference discount persists across all levels of the C-Suite, corporate governance quality, time periods, and after controlling for opaque measures of where the executive grew up. Our study shows the location of an executive's undergraduate university is a consequential component of his or her geographic preference, and that such preference has meaningful implications for his or her compensation.

Keywords: Executive compensation; Managerial incentives; Geographic preference discount (search for similar items in EconPapers)
JEL-codes: G30 J30 J31 J33 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:74:y:2022:i:c:s0929119922000554

DOI: 10.1016/j.jcorpfin.2022.102212

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