Skip to main content

Research Repository

Advanced Search

Societal Equality Sentiment and Executive Compensation

Onal, Bunyamin; Petmezas, Dimitris; Xiong, Nan

Authors

Bunyamin Onal

Dr Nan Xiong nan.xiong@durham.ac.uk
Assistant Professor in Finance



Abstract

Using elections that reveal changes in countries’ leniency on the left-right political spectrum, we examine whether societal sentiment regarding income inequality affects executive compensation. We find that elections that bring left-leaning (pro-equality) political leaders to power are associated with significantly lower CEO pay and this impact begins in the year of such elections, not before. We further show that a rise in pro-equality sentiment restrains powerful CEOs from extracting rents. However, such sentiment also imposes value-damaging limits on incentives of senior executives in a given firm or industry. Our results are robust to a host of alternative measures and specifications.

Citation

Onal, B., Petmezas, D., & Xiong, N. (2022). Societal Equality Sentiment and Executive Compensation. Journal of Corporate Finance, 77, Article 102314. https://doi.org/10.1016/j.jcorpfin.2022.102314

Journal Article Type Article
Acceptance Date Oct 21, 2022
Online Publication Date Nov 1, 2022
Publication Date 2022-12
Deposit Date Oct 24, 2022
Publicly Available Date May 2, 2024
Journal Journal of Corporate Finance
Print ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 77
Article Number 102314
DOI https://doi.org/10.1016/j.jcorpfin.2022.102314
Public URL https://durham-repository.worktribe.com/output/1188153

Files







You might also like



Downloadable Citations