73 Pages Posted: 7 Sep 2017 Last revised: 25 Sep 2017
Date Written: September 5, 2017
Using multiple measures of attack proximity, we show that CEOs employed at firms located near terrorist attacks earn an 8.8% terrorist compensation premium relative to CEOs at firms located far from attacks. CEOs at terrorist attack-proximate firms prefer cash-based compensation (e.g., salary and bonus) over equity-based compensation (e.g., options and stocks granted). The effect is causal and is larger when the bargaining power of the CEO is higher relative to that of the firm.
Keywords: Terrorist attacks, Executive compensation, Compensation structure, CEO labor market
JEL Classification: G15, G30, G34
Suggested Citation: Suggested Citation
Dai, Yunhao and Rau, P. Raghavendra and Stouraitis, Aris and Tan, Weiqiang, An Ill Wind? Terrorist Attacks and CEO Compensation (September 5, 2017). Available at SSRN: https://ssrn.com/abstract=3032283