An ill wind? Terrorist attacks and CEO compensation

Yunhao Dai, Raghavendra Rau, Aris Stouraitis and Weiqiang Tan

Journal of Financial Economics, 2020, vol. 135, issue 2, 379-398

Abstract: Using multiple measures of attack proximity, we show that CEOs employed at firms located near terrorist attacks earn an average pay increase of 12% after the attack relative to CEOs at firms located far from attacks. CEOs at terrorist attack-proximate firms prefer cash-based compensation increases (e.g., salary and bonus) over equity-based compensation (e.g., options and stocks granted). The effect is causal and it is larger when the bargaining power of the CEO is high. Other executives and workers do not receive a terrorist attack premium.

Keywords: Terrorist attacks; Executive compensation; Compensation structure; CEO labor market; Nonmonetary compensation (search for similar items in EconPapers)
JEL-codes: G14 G30 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:135:y:2020:i:2:p:379-398

DOI: 10.1016/j.jfineco.2019.06.005

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