The Effect of Labor Unions on CEO Compensation

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

16 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)553-582
Journal / PublicationJournal of Financial and Quantitative Analysis
Volume52
Issue number2
Publication statusPublished - Apr 2017

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.

Citation Format(s)

The Effect of Labor Unions on CEO Compensation. / Huang, Qianqian; Jiang, Feng; Lie, Erik; Que, Tingting.

In: Journal of Financial and Quantitative Analysis, Vol. 52, No. 2, 04.2017, p. 553-582.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal