Journal article
The Effect of Labor Unions on CEO Compensation
Journal of financial and quantitative analysis, Vol.52(2), pp.553-582
04/01/2017
DOI: 10.1017/S0022109017000072
Abstract
We find evidence that labor unions affect chief executive officer (CEO) compensation. First, we find that firms with strong unions pay their CEOs less. The negative effect is robust to various tests for endogeneity, including cross-sectional variations and a regression discontinuity design. Second, we find that CEO compensation is curbed before union contract negotiations, especially when the compensation is discretionary and the unions have a strong bargaining position. Third, we report that curbing CEO compensation mitigates the chance of a labor strike, thus providing a rationale for firms to pay CEOs less when facing strong unions.
The United Auto Workers says it knows it needs to help Detroit's automakers cut labor costs to reduce the gap in production expenses with Asian rivals. But as talks continue on new contracts, the union also is questioning why top executives at the automakers are paid what they are. (USA Today, Oct. 10, 2007)
Details
- Title: Subtitle
- The Effect of Labor Unions on CEO Compensation
- Creators
- Qianqian Huang - City University of Hong KongFeng Jiang - State University of New YorkErik Lie - University of IowaTingting Que - University of Alabama in Huntsville
- Resource Type
- Journal article
- Publication Details
- Journal of financial and quantitative analysis, Vol.52(2), pp.553-582
- Publisher
- Cambridge Univ Press
- DOI
- 10.1017/S0022109017000072
- ISSN
- 0022-1090
- eISSN
- 1756-6916
- Number of pages
- 30
- Language
- English
- Date published
- 04/01/2017
- Academic Unit
- Finance
- Record Identifier
- 9984380481202771
Metrics
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