Bunyamin Onal
Societal Equality Sentiment and Executive Compensation
Onal, Bunyamin; Petmezas, Dimitris; Xiong, Nan
Authors
Professor Dimitris Petmezas dimitris.petmezas@durham.ac.uk
Professor
Dr Nan Xiong nan.xiong@durham.ac.uk
Assistant Professor in Finance
Abstract
Using elections that reveal changes in countries’ leniency on the left-right political spectrum, we examine whether societal sentiment regarding income inequality affects executive compensation. We find that elections that bring left-leaning (pro-equality) political leaders to power are associated with significantly lower CEO pay and this impact begins in the year of such elections, not before. We further show that a rise in pro-equality sentiment restrains powerful CEOs from extracting rents. However, such sentiment also imposes value-damaging limits on incentives of senior executives in a given firm or industry. Our results are robust to a host of alternative measures and specifications.
Citation
Onal, B., Petmezas, D., & Xiong, N. (2022). Societal Equality Sentiment and Executive Compensation. Journal of Corporate Finance, 77, Article 102314. https://doi.org/10.1016/j.jcorpfin.2022.102314
Journal Article Type | Article |
---|---|
Acceptance Date | Oct 21, 2022 |
Online Publication Date | Nov 1, 2022 |
Publication Date | 2022-12 |
Deposit Date | Oct 24, 2022 |
Publicly Available Date | May 2, 2024 |
Journal | Journal of Corporate Finance |
Print ISSN | 0929-1199 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 77 |
Article Number | 102314 |
DOI | https://doi.org/10.1016/j.jcorpfin.2022.102314 |
Public URL | https://durham-repository.worktribe.com/output/1188153 |
Files
This file is under embargo until May 2, 2024 due to copyright restrictions.
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