Abstract

http://ssrn.com/abstract=1612201
 
 

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Public Opinion and Executive Compensation


Camelia M. Kuhnen


University of North Carolina Kenan-Flagler Business School

Alexandra Niessen-Ruenzi


University of Mannheim - Department of Finance

June 1, 2010

Management Science, 58 (7): 1249-1272, July 2012

Abstract:     
We investigate whether public opinion influences the level and structure of executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most criticized pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase less contentious types of pay such as salary, while overall compensation does not change. The reduction in option pay after increased press negativity is more pronounced when firms, CEOs and boards have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion.

Number of Pages in PDF File: 33

Keywords: executive compensation, public opinion, media coverage

JEL Classification: G34, M52, J33

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Date posted: May 20, 2010 ; Last revised: April 24, 2014

Suggested Citation

Kuhnen, Camelia M. and Niessen-Ruenzi, Alexandra, Public Opinion and Executive Compensation (June 1, 2010). Management Science, 58 (7): 1249-1272, July 2012. Available at SSRN: http://ssrn.com/abstract=1612201

Contact Information

Camelia M. Kuhnen (Contact Author)
University of North Carolina Kenan-Flagler Business School ( email )
Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
(919) 9623284 (Phone)
HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/

Alexandra Niessen-Ruenzi
University of Mannheim - Department of Finance ( email )
Mannheim, 68131
Germany
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