The Power of the Pen and Executive Compensation
John E. Core
Massachusetts Institute of Technology (MIT) - Sloan School of Management
Wayne R. Guay
University of Pennsylvania - Accounting Department
David F. Larcker
Stanford University - Graduate School of Business
Journal of Financial Economics Vol. 88, No. 1 (April, 2008), pp. 1-25
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 Classification: G32, G34, J33, M41
Date posted: September 17, 2007
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