The Impact of Corporate Reputation Ratings on CEO Compensation Under Diverse Economic Conditions

Joel Rudin () and Jooh Lee
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Joel Rudin: Rowan University
Jooh Lee: Rowan University

Corporate Reputation Review, 2021, vol. 24, issue 3, No 1, 117-127

Abstract: Abstract Although it is assumed that CEOs attempt to use corporate reputation ratings to justify increases in their annual compensation, controversy persists on the relationship between corporate reputation ratings and CEO compensation. Based on agency theory and signaling theory, we predict a positive relationship between corporate reputation ratings and CEO compensation but only during periods of economic recovery. Using a subset of Fortune’s “Most Admired” companies, this study demonstrates that corporate reputation ratings are significantly associated with CEO compensation during periods of economic recovery but not during periods of economic recession, after controlling the potential extraneous factors that may influence CEO pay.

Keywords: Corporate reputation ratings; Executive compensation; Chief executive officer; Economic cycle (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1057/s41299-020-00095-0

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