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

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

64 Pages Posted: 20 Jan 2017 Last revised: 23 Apr 2021

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: February 22, 2021

Abstract

Mandatory disclosure of CEO compensation peers signals potential outside opportunities for the cited CEOs by revealing which companies view them as viable executive candidates. CEOs cited often as compensation peers – especially by larger firms, which represent attractive employment opportunities – are more likely to leave for better positions or receive compensation increases. Equity-based awards following cites by larger firms have shorter vesting periods, suggesting these CEOs gain negotiating power relative to their boards. The disclosure requirement enhanced labor market transparency and led to higher compensation for highly cited CEOs without penalizing less cited CEOs, putting upward pressure on CEO compensation.

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

Suggested Citation

Choi, Daewoung and Cicero, David C. and Mobbs, Shawn, CEO Marketability, Employment Opportunities, and Compensation: Evidence from Compensation Peer Citations (February 22, 2021). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, 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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