The Impact of Firm Prestige on Executive Compensation
63 Pages Posted: 22 Feb 2012 Last revised: 7 Jan 2016
Date Written: January 6, 2016
We show that CEOs of prestigious firms earn less. Total compensation is on average 8% lower for firms listed in Fortune's ranking of America's most admired companies. We suggest that CEOs are willing to trade off status and career benefits from working for a publicly admired company against additional monetary compensation. Our identification strategy is based on matched sample analyses, difference-in-differences regressions, and a regression discontinuity design. We perform several robustness checks and exclude many alternative explanations, including that firm prestige just proxies for better corporate governance, or for increased exposure of the pay-setting process to media attention.
Keywords: CEO compensation, firm prestige, social status, career benefits
JEL Classification: G30, M52
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