One dollar CEOs
Journal article, Peer reviewed
Published version
Date
2019-12-28Metadata
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Original version
Loureiro, Makhija, Zhang D. One dollar CEOs. Journal of Business Research. 2020;109:425-439 https://dx.doi.org/10.1016/j.jbusres.2019.11.086Abstract
We study the impact of $1 CEO salaries on firm performance and CEO total compensation. We find that, on average, $1 CEO firms earn higher total compensation and lower Stock market returns relative to their peers after the adoption of $1 salaries. The effect on total compensation is mitigated if the $1 CEO firm is undergoing restructuring or the CEO is entrenched and aggravated if the CEO is overconfident. The stock market underperformance especially affects firms not under a restructuring process and firms with entrenched or overconfident CEOs.