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http://ssrn.com/abstract=1571823
 
 

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The Ruse of a One-Dollar CEO Salary


Gilberto R. Loureiro


University of Minho - School of Economics and Management

Anil K. Makhija


Ohio State University (OSU) - Department of Finance

Dan Zhang


BI Norwegian Business School

January 10, 2014

Charles A. Dice Center Working Paper No. 2011-7
Fisher College of Business Working Paper No. 2011-03-007

Abstract:     
We study the motives and impact of $1 CEO salaries on firm performance and CEO compensation. We find that on average $1 CEO firms earn lower stock market returns relative to their peers following the adoptions of $1 salaries. The underperformance is especially pronounced for firms that adopt $1 CEO salaries for reasons other than restructuring, experiencing about 30% lower stock returns during the three-year post-adoption period. Meanwhile, CEOs in these firms are better off since they get more total compensation and larger equity grants in the second year following adoptions than the loss in pay in the first year.

Number of Pages in PDF File: 47

Keywords: CEO compensation, CEO characteristics

JEL Classification: G30, G32, G34

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Date posted: March 18, 2010 ; Last revised: January 17, 2014

Suggested Citation

Loureiro, Gilberto R. and Makhija, Anil K. and Zhang, Dan, The Ruse of a One-Dollar CEO Salary (January 10, 2014). Charles A. Dice Center Working Paper No. 2011-7; Fisher College of Business Working Paper No. 2011-03-007. Available at SSRN: http://ssrn.com/abstract=1571823 or http://dx.doi.org/10.2139/ssrn.1571823

Contact Information

Gilberto R. Loureiro
University of Minho - School of Economics and Management ( email )
4710-057 Braga
Portugal
+351-253-605553 (Phone)
+351-253-601380 (Fax)
Anil K. Makhija (Contact Author)
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-1899 (Phone)

Dan Zhang
BI Norwegian Business School ( email )
Nydalsveien 37
Oslo, 0442
Norway
HOME PAGE: http://www.bi.edu/research/employees/?ansattid=A1210112
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