Does CEO (over)compensation influence corporate reputation?

Schulz, Ann‐Christine; Flickinger, Miriam

doi:10.1007/s11846-018-0305-0

Cited by 12 publications

(16 citation statements)

References 116 publications

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“…3 As suggested in the business world, overcompensating CEOs can also benefit employee engagement if it leads to better business results. Indeed, employee wages have been seen to particularly increase with increasing compensation of overcompensated CEOs (Dittman et al 2018) and there is some evidence that CEO overcompensation has a weak positive effect on corporate reputation (Schulz and Flickinger 2020). Yet, there is mixed evidence of whether the overpayment of CEOs leads to better company performance (Brick et al 2006;Fong et al 2010;Haynes et al 2017).…”

Section: Ceo Overcompensation and Employee Engagementmentioning

confidence: 99%

“…CEO overcompensation is equal to the residual if the residual was positivereflecting the unexplained portion of executive compensation-and 0 otherwise. An alternative established approach is to compare the CEO's compensation to the compensation of CEOs of comparable firms (e.g., Core et al 2008;Vergne et al 2018;Schulz and Flickinger 2020). This approach allows for identifying companies where CEOs are systematically overcompensated at the cost of higher omitted variable bias.…”

Section: Ceo Overcompensationmentioning

confidence: 99%

“…Firm performance is a standard predictor of CEO compensation (e.g., Schulz and Flickinger 2020;Wade et al 2006;Haynes et al 2017) that may increase employee engagement (Harter et al 2010). We measured firm performance using two complementary indicators: return on assets (ROA) and the percentage of sales growth.…”

Section: Firm Performancementioning

confidence: 99%

“…The natural logarithm of firm size is another standard predictor of CEO compensation (e.g., Schulz and Flickinger 2020;Wade et al 2006) that can negatively relate to employee perceptions (Tansel and Gazîoğlu 2014). Following Haynes et al (2017), firm size is composed of three standardized and equally weighted variables: number of employees, total annual sales, and total firm assets.…”

Section: Firm Sizementioning

confidence: 99%

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The influence of CEO compensation on employee engagement

Hendriks

Burger²,

Commandeur³

2022

Rev Manag Sci

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The soaring compensation levels of chief executive officers (CEOs) have spurred an intense debate about its outcomes. This paper examines an understudied outcome in this regard: employee engagement. Using a dynamic panel model with data from 336 publicly listed firms across 26 countries, we find that employee engagement is generally unaffected by CEO (over)compensation. However, negative effects emerge under specific conditions. First, employee engagement declines with negative media coverage about CEO compensation. Second, employee engagement declines with greater CEO (over)compensation in the financial sector, which is a sector with extraordinary levels of CEO compensation and compensation controversies. The findings suggest that a ceiling effect exists, at which point negative effects emerge and employee engagement becomes relevant in determining CEO compensation policies, while the general insensitivity of employee engagement to CEO compensation can help explain the soaring CEO compensation levels.

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Section: Ceo Overcompensation and Employee Engagementmentioning

confidence: 99%

Section: Ceo Overcompensationmentioning

confidence: 99%

Section: Firm Performancementioning

confidence: 99%

Section: Firm Sizementioning

confidence: 99%

See 2 more Smart Citations

The influence of CEO compensation on employee engagement

Hendriks

Burger²,

Commandeur³

2022

Rev Manag Sci

View full text Add to dashboard Cite

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“…The idiosyncratic risk estimate we use employs the Fama–French three-factor model (Fama and French, 1992) to estimate the influence of broad market movements, which were then netted out against total return volatility. These estimates are available from Wharton Research Data Service's Beta Suite (Schulz and Flickinger, 2018; Heavilin and Songur, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Bridging the gap between management and finance: entrepreneurial orientation and idiosyncratic risk

Kihm¹,

Kamal

2020

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PurposeManagement theorists suggest that entrepreneurially oriented firms manifest higher risk levels than more conservative companies, but executives of such firms and their consultants argue that the opposite is true. The purpose of this paper is to explore this issue and examine the relationship between entrepreneurial orientation and idiosyncratic risk of firms.Design/methodology/approachContent analysis is applied to the 2018 third-quarter earnings call transcripts for 992 companies to measure five factors attributed to entrepreneurially oriented firms: autonomy, competitive aggressiveness, innovation, proactiveness and risk-taking, and their relationship to firm-level idiosyncratic risk. Multivariate regression analysis is used to examine the effect of these factors on measures of idiosyncratic risk obtained from the Wharton Research database Service's Beta Suite.FindingsResults show that firms whose executives frequently use terms related to risk-taking tend to manifest higher levels of idiosyncratic risk, but those firms whose executives stress innovation-related terms tend to have lower levels of idiosyncratic risk. The degree to which executives use words related to the three other entrepreneurial orientation factors show no associations with idiosyncratic risk.Practical implicationsThe results might suggest to managers which of the individual components of entrepreneurial orientation, if adopted, are likely to affect firm-specific risk and in what way.Originality/valueThis paper is the first to attempt to bridge the gap between the management concept of entrepreneurial orientation and the financial concept of idiosyncratic risk by studying the possible relationship between the two. The research also uses the novel methodology of applying content analysis to earnings call transcripts, which is uncommon in finance research.

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Reden und Antworten der Finanzwirtschaft im Fokus

Etzel¹

2019

Edition Bankmagazin

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Does CEO (over)compensation influence corporate reputation?

Cited by 12 publications

References 116 publications

The influence of CEO compensation on employee engagement

The influence of CEO compensation on employee engagement

Bridging the gap between management and finance: entrepreneurial orientation and idiosyncratic risk

Reden und Antworten der Finanzwirtschaft im Fokus

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