Market Forces and CEO Pay: Shocks to CEO Demand Induced by IPOWaves

• 成果类型: Article
• 署名作者: Nickerson, Jordan
• 署名单位: Boston College
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx004
• 发表日期: 2017
• 页码: 2272
• 关键词: executive-compensation; corporate governance; performance; explanation; COMPETITION; earnings; industry; banking; equity; MODEL

摘要

I develop a simple competitive equilibrium model and derive the prediction that CEO pay-size elasticity increases when more firms compete for an inelastic supply of managers. Using industry-level IPO waves as a proxy for increased competition for CEOs, I find that pay-size elasticity increases by 6% with a one-standard-deviation increase in IPO activity. This effect is stronger in specialized industries. In addition, increased IPO activity leads to a greater likelihood of executive transitions between firms. These findings indicate that market forces play a key role in the determination of CEO pay.