Product recall and CEO compensation: Evidence from the automobile industry

Mahfuja Malik and Fatima Jebari

Finance Research Letters, 2023, vol. 54, issue C

Abstract: This study examines the association between product recall and CEO compensation. Using a sample of U.S. automobile industry product recalls from 1999 to 2018, we find that product recalls have significant negative impacts on CEO compensation. Our findings hold after controlling for the common determinants of CEO compensation, such as firms’ stock market and operating performance and CEO-specific characteristics. An additional analysis shows that CEOs’ total and long-term compensation decreases with the number of recalls. However, we find no association between CEOs’ cash compensation and product recalls.

Keywords: Product recall; CEO compensation; Automobile industry (search for similar items in EconPapers)
JEL-codes: G30 J13 L15 L62 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001885

DOI: 10.1016/j.frl.2023.103815

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