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Do entrenched managers pay their workers more?

Cronqvist, Henrik ; Heyman, Fredrik LU ; Nilsson, Mattias LU ; Svaleryd, Helena and Vlachos, Jonas (2009) In Journal of Finance 64(1). p.309-339
Abstract

Analyzing a panel that matches public firms with worker-level data, we find that managerial entrenchment affects workers' pay. CEOs with more control pay their workers more, but financial incentives through cash flow rights ownership mitigate such behavior. Entrenched CEOs pay more to employees closer to them in the corporate hierarchy, geographically closer to the headquarters, and associated with conflict-inclined unions. The evidence is consistent with entrenched CEOs paying more to enjoy private benefits such as lower effort wage bargaining and improved social relations with employees. Our results show that managerial ownership and corporate governance can play an important role for employee compensation.

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author
; ; ; and
publishing date
type
Contribution to journal
publication status
published
subject
in
Journal of Finance
volume
64
issue
1
pages
31 pages
publisher
Wiley-Blackwell
external identifiers
  • scopus:58949087712
ISSN
0022-1082
DOI
10.1111/j.1540-6261.2008.01435.x
language
English
LU publication?
no
id
ab1411ca-fb6e-4c74-b41e-449359af87cf
date added to LUP
2021-10-18 11:05:44
date last changed
2022-03-19 03:34:29
@article{ab1411ca-fb6e-4c74-b41e-449359af87cf,
  abstract     = {{<p>Analyzing a panel that matches public firms with worker-level data, we find that managerial entrenchment affects workers' pay. CEOs with more control pay their workers more, but financial incentives through cash flow rights ownership mitigate such behavior. Entrenched CEOs pay more to employees closer to them in the corporate hierarchy, geographically closer to the headquarters, and associated with conflict-inclined unions. The evidence is consistent with entrenched CEOs paying more to enjoy private benefits such as lower effort wage bargaining and improved social relations with employees. Our results show that managerial ownership and corporate governance can play an important role for employee compensation.</p>}},
  author       = {{Cronqvist, Henrik and Heyman, Fredrik and Nilsson, Mattias and Svaleryd, Helena and Vlachos, Jonas}},
  issn         = {{0022-1082}},
  language     = {{eng}},
  number       = {{1}},
  pages        = {{309--339}},
  publisher    = {{Wiley-Blackwell}},
  series       = {{Journal of Finance}},
  title        = {{Do entrenched managers pay their workers more?}},
  url          = {{http://dx.doi.org/10.1111/j.1540-6261.2008.01435.x}},
  doi          = {{10.1111/j.1540-6261.2008.01435.x}},
  volume       = {{64}},
  year         = {{2009}},
}