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The Power of the Pen and Executive Compensation

John E. Core
University of Pennsylvania - Accounting Department

Wayne R. Guay
University of Pennsylvania - Accounting Department

David F. Larcker
Stanford University - Graduate School of Business

May 23, 2007

Abstract:
We examine the press' role in monitoring and influencing executive compensation practice using more than 11,000 press articles about CEO compensation from 1994 to 2002. Negative press coverage is more strongly related to excess annual pay than to raw annual pay, suggesting a sophisticated approach by the media in selecting CEOs to cover. However, negative coverage is also greater for CEOs with more option exercises, suggesting the press engages in some degree of "sensationalism." We find little evidence that firms respond to negative press coverage by decreasing excess CEO compensation or increasing CEO turnover.

Keywords: press, media, executive compensation, corporate governance

JEL Classifications: G32, G34, J33, M41

Working Paper Series

Date posted: November 07, 2005 ; Last revised: February 09, 2009

Suggested Citation

Core, John E., Guay, Wayne R. and Larcker, David F., The Power of the Pen and Executive Compensation (May 23, 2007). Available at SSRN: http://ssrn.com/abstract=838347

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Contact Information

Wayne R. Guay (Contact Author) University of Pennsylvania - Accounting Department ( email ) Philadelphia, PA 19104-6365 United States 215-898-7775 (Phone) 215-573-2054 (Fax)
John E. Core University of Pennsylvania - Accounting Department ( email ) Philadelphia, PA 19104-6365 United States 215-898-4821 (Phone) 215-573-2054 (Fax)
David F. Larcker Stanford University - Graduate School of Business ( email ) Graduate School of Business 518 Memorial Way Stanford, CA 94305-5015 United States 650-725-6159 (Phone)