The Power of the Pen and Executive Compensation

54 Pages Posted: 7 Nov 2005  

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Wayne R. Guay

University of Pennsylvania - Accounting Department

David F. Larcker

Stanford University - Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: May 23, 2007

Abstract

We examine the press' role in monitoring and influencing executive compensation practice using more than 11,000 press articles about CEO compensation from 1994 to 2002. Negative press coverage is more strongly related to excess annual pay than to raw annual pay, suggesting a sophisticated approach by the media in selecting CEOs to cover. However, negative coverage is also greater for CEOs with more option exercises, suggesting the press engages in some degree of "sensationalism." We find little evidence that firms respond to negative press coverage by decreasing excess CEO compensation or increasing CEO turnover.

Keywords: press, media, executive compensation, corporate governance

JEL Classification: G32, G34, J33, M41

Suggested Citation

Core, John E. and Guay, Wayne R. and Larcker, David F., The Power of the Pen and Executive Compensation (May 23, 2007). Available at SSRN: https://ssrn.com/abstract=838347 or http://dx.doi.org/10.2139/ssrn.838347

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
E62-416
Cambridge, MA 02138
United States

Wayne R. Guay (Contact Author)

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
1329 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6365
United States
215-898-7775 (Phone)
215-573-2054 (Fax)

David F. Larcker

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

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