Abstract

http://ssrn.com/abstract=1107280
 
 

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The Effect of Social Pressures on CEO Compensation


James S. Ang


Florida State University

Gregory Leo Nagel


Middle Tennessee State University

Jun Yang


Indiana University - Kelley School of Business - Department of Finance

May 15, 2014


Abstract:     
We find that social pressures have a positive effect on CEO compensation. Social pressures come from frequent interactions with other CEOs and wealthy people (Forbes 400 people and social elites) in the local area; from attending industry, alumni, and charitable events; and from displaying and comparing wealth through luxury homes. Pay premiums associated with social pressures (social premiums) persist after incorporating other determinants of pay: local economic conditions, firm characteristics and performance, and corporate governance. Our results are robust to adding state fixed effects and firm fixed effects. Social premiums are more important for those who are most likely to value social recognition: young CEOs and CEOs who did not graduate from an Ivy League school.

Number of Pages in PDF File: 44

Keywords: Corporate governance; CEO compensation; social interactions; comparison groups; social pressures

JEL Classification: G3, J31, J33

working papers series


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Date posted: March 25, 2008 ; Last revised: May 20, 2014

Suggested Citation

Ang , James S. and Nagel, Gregory Leo and Yang, Jun, The Effect of Social Pressures on CEO Compensation (May 15, 2014). Available at SSRN: http://ssrn.com/abstract=1107280 or http://dx.doi.org/10.2139/ssrn.1107280

Contact Information

James S. Ang
Florida State University ( email )
College of Business
Tallahassee, FL 32306-1042
United States
904-644-8208 (Phone)
Gregory Leo Nagel
Middle Tennessee State University ( email )
P.O. Box 50
Murfreesboro, TN 37132
United States
Jun Yang (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3395 (Phone)
812-855-5875 (Fax)

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