Managerial Attributes and Executive Compensation

John R. Graham, Si Li and Jiaping Qiu

No 17368, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay. We then show that in many settings, it is important to include fixed effects to mitigate potential omitted variable bias. Furthermore, we find that compensation fixed effects are significantly correlated with management styles (i.e., manager fixed effects in corporate policies). Finally, the method used in the paper has a number of potential applications in financial economics.

JEL-codes: C23 G22 G3 J24 J31 J33 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-bec and nep-lma
Note: TWP
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Citations: View citations in EconPapers (16)

Published as Graham, John R., Si Li, and Jiaping Qiu, 2011, Managerial Attributes and Executive Compensation, Review of Financial Studies 24, 1944-1979.

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