Abstract

http://ssrn.com/abstract=1480670
 


 



Knowledge, Compensation, and Firm Value: An Empirical Analysis of Firm Communication


Feng Li


Shanghai Advanced Institute of Finance, Shanghai Jiaotong University

Michael Minnis


University of Chicago - Booth School of Business

Venky Nagar


University of Michigan, Stephen M. Ross School of Business

Madhav V. Rajan


Stanford Graduate School of Business

May 1, 2014

Journal of Accounting and Economics, Volume 58, Issue 1, August 2014, Pages 96–116
Chicago Booth Research Paper No. 12-03
Rock Center for Corporate Governance at Stanford University Working Paper No. 83

Abstract:     
Knowledge is central to managing an organization, but its presence in employees is difficult to measure directly. We hypothesize that external communication patterns reveal the location of knowledge within the management team. Using a large database of firm conference call transcripts, we find that CEOs speak less in settings where they are likely to be relatively less knowledgeable. CEOs who speak more are also paid more, and firms whose CEO pay is not commensurate with CEO speaking have a lower industry-adjusted Tobin’s Q. Communication thus appears to reveal knowledge.

Keywords: knowledge, communication, firm value, compensation, authority, organization

JEL Classification: D22, D70, D80, L23, M12


Not Available For Download

Date posted: November 24, 2014 ; Last revised: September 18, 2015

Suggested Citation

Li, Feng and Minnis, Michael and Nagar, Venky and Rajan, Madhav V., Knowledge, Compensation, and Firm Value: An Empirical Analysis of Firm Communication (May 1, 2014). Journal of Accounting and Economics, Volume 58, Issue 1, August 2014, Pages 96–116; Chicago Booth Research Paper No. 12-03; Rock Center for Corporate Governance at Stanford University Working Paper No. 83. Available at SSRN: http://ssrn.com/abstract=1480670 or http://dx.doi.org/10.2139/ssrn.1480670

Contact Information

Feng Li
Shanghai Advanced Institute of Finance, Shanghai Jiaotong University ( email )
211 West Huaihai Road
Shanghai, Shanghai 200030
China
Michael Minnis
University of Chicago - Booth School of Business ( email )
5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Venky Nagar
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-647-3292 (Phone)
734-764-3146 (Fax)
Madhav V. Rajan (Contact Author)
Stanford Graduate School of Business ( email )
655 Knight Way
Stanford, CA 94305-5015
United States
HOME PAGE: http://gobi.stanford.edu/facultybios/bio.asp?ID=30

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