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Is Pay a Matter of Values?

Renee B. Adams

University of New South Wales; Financial Research Network (FIRN); European Corporate Governance Institute (ECGI)

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

February 2012

Public outrage over executive compensation reached an all time high during the financial crisis. Around the world, many argued that CEOs and boards were immoral in setting their pay and pressured governments to impose restrictions on executive pay. Using a unique sample of data on human values for CEOs, we show that CEOs and directors have different values than general members of the population. CEOs and directors place more emphasis on power and achievement values than members of the population and they emphasize self-direction values more. However, values appear to have little explanatory power for pay, in contrast to economic variables. While some CEOs may be unethical in setting their pay, our results suggest that pay is not a matter of values on average.

Number of Pages in PDF File: 49

Keywords: Executive compensation, internal firm governance, labor market, culture

JEL Classification: G3, J33

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Date posted: January 11, 2010 ; Last revised: July 23, 2012

Suggested Citation

Adams, Renee B. and Giannetti, Mariassunta, Is Pay a Matter of Values? (February 2012). Available at SSRN: http://ssrn.com/abstract=1534566 or http://dx.doi.org/10.2139/ssrn.1534566

Contact Information

Renée B. Adams
University of New South Wales ( email )
Sydney, NSW 2052
+61(2)93854280 (Phone)

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
HOME PAGE: http://www.firn.org.au

European Corporate Governance Institute (ECGI)
B-1050 Brussels
HOME PAGE: http://www.ecgi.org
Mariassunta Giannetti (Contact Author)
Stockholm School of Economics ( email )
P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)
HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
B-1050 Brussels
HOME PAGE: http://www.ecgi.org
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm

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