Journal
JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS
Volume 52, Issue 2, Pages 553-582Publisher
CAMBRIDGE UNIV PRESS
DOI: 10.1017/S0022109017000072
Keywords
-
Categories
Ask authors/readers for more resources
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)
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available