The impact of firm prestige on executive compensation

Florens Focke, Ernst Maug and Alexandra Niessen-Ruenzi

Journal of Financial Economics, 2017, vol. 123, issue 2, 313-336

Abstract: We show that chief executive officers (CEOs) of prestigious firms earn less. Total compensation is on average 8% lower for firms listed in Fortune’s ranking of America’s most admired companies. We suggest that CEOs are willing to trade off status and career benefits from working for a publicly admired company against additional monetary compensation. Our identification strategy is based on matched sample analyses, difference-in-differences regressions, and a regression discontinuity design. We perform several robustness checks and exclude many alternative explanations, including that firm prestige just proxies for better corporate governance or for increased exposure of the pay-setting process to media attention.

Keywords: CEO compensation; Firm prestige; Social status; Career benefits (search for similar items in EconPapers)
JEL-codes: G39 M52 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:123:y:2017:i:2:p:313-336

DOI: 10.1016/j.jfineco.2016.09.011

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