2006–2010

Do Entrenched Managers Pay Their Workers More?

Reprint No. 2009:3

Author(s): Henrik Cronqvist, Fredrik Heyman, Mattias Nilsson, Helena Svaleryd and Jonas VlachosYear: 2009 Title: Journal of Finance Volume (No.): 64 (1) Pages: 309–339
Online article (restrictions may apply)


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.


Reference:
Cronqvist, Henrik, Fredrik Heyman, Mattias Nilsson, Helena Svaleryd and Jonas Vlachos (2009), "Do Entrenched Managers Pay Their Workers More?". Journal of Finance 64(1), 309–339.

Fredrik Heyman

Contact

Ph: +46 8 665 4537
fredrik.heyman@ifn.se

Jonas Vlachos

Contact

Ph: +46 8 16 30 46
Mob: +46 70 893 3240
jonas.vlachos@ne.su.se

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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