CEO Marketability, Employment Opportunities, and Compensation: Evidence from Compensation Peer Citations

70 Pages Posted: 20 Jan 2017 Last revised: 19 Dec 2019

See all articles by Daewoung Choi

Daewoung Choi

Louisiana State University, Shreveport

David C. Cicero

Harbert College of Business, Auburn University

Shawn Mobbs

University of Alabama - Culverhouse College of Business Administration

Date Written: December 18, 2019

Abstract

We present evidence that the 2006 compensation-peer disclosure rule increased executive labor market efficiency by revealing information about executives’ outside opportunities. Difference-in-differences tests provide evidence of increased CEO mobility and compensation levels after the rule was enacted. Executives of firms with more peer citations – especially from larger firms – are more likely to leave for better positions or to receive compensation increases. Highly-cited firms are more likely to increase equity-based compensation, which helps with executive retention. These results are noteworthy since the intent of the rule was to limit opportunistic benchmarking to justify higher compensation.

Keywords: compensation peers, outside opportunities, 2006 disclosure rule, labor market efficiency, compensation

Suggested Citation

Choi, Daewoung and Cicero, David C. and Mobbs, Shawn, CEO Marketability, Employment Opportunities, and Compensation: Evidence from Compensation Peer Citations (December 18, 2019). Available at SSRN: https://ssrn.com/abstract=2902359 or http://dx.doi.org/10.2139/ssrn.2902359

Daewoung Choi (Contact Author)

Louisiana State University, Shreveport ( email )

Shreveport, LA
United States

David C. Cicero

Harbert College of Business, Auburn University ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States

Shawn Mobbs

University of Alabama - Culverhouse College of Business Administration ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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