The Effect of Social Pressures on CEO Compensation
James S. Ang
Florida State University
Gregory Leo Nagel
Middle Tennessee State University
Indiana University Bloomington - Kelley School of Business - Department of Finance
June 6, 2012
We analyze the effect of social pressures on CEO compensation via interacting with other CEOs, Forbes 400 people, and social elites in the local area; attending industry, alumni, and charitable events; and comparing luxury homes. Each venue is an independent source of social pressures that elevate CEO pay to a level not explained by local economic conditions, firm performance and characteristics, and corporate governance. Social premiums in CEO pay are greater at firms with young, non-Ivy League and non-narcissistic CEOs and at firms with directors who are likely to understand and conform to social norms (well governed or locally rooted).
Number of Pages in PDF File: 51
Keywords: CEO compensation, social pressure, social interactions, elites
JEL Classification: G32, G34working papers series
Date posted: March 25, 2008 ; Last revised: June 7, 2012
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