An Ill Wind? Terrorist Attacks and CEO Compensation
69 Pages Posted: 7 Sep 2017 Last revised: 30 Oct 2017
Date Written: October 29, 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 not driven by endogeneity, it is causal and it 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