Public opinion and executive compensation

Camelia Kuhnen and Alexandra Niessen

No 08-09 [rev.], CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We inquire whether public opinion influences executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most discussed pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase other compensation including stock awards, overall reducing pay-to-performance sensitivity. The reduction in option pay after increased press negativity is more pronounced when firms and CEOs have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion.

Keywords: executive compensation; public opinion; social norms; media coverage (search for similar items in EconPapers)
JEL-codes: G34 J33 M52 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Public Opinion and Executive Compensation (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:0809r

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