Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69237
Authors: 
Kuhnen, Camelia M.
Niessen, Alexandra
Year of Publication: 
2010
Series/Report no.: 
CFR Working Paper 08-09 [rev.]
Abstract: 
We inquire whether public opinion influences executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most discussed pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase other compensation including stock awards, overall reducing pay-to-performance sensitivity. The reduction in option pay after increased press negativity is more pronounced when firms and CEOs have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion.
Subjects: 
executive compensation
public opinion
social norms
media coverage
JEL: 
G34
M52
J33
Document Type: 
Working Paper

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