Do entrenched managers pay their workers more?

Henrik Cronqvist, Fredrik Heyman, Mattias Nilsson, Helena Svaleryd, Jonas Vlachos

Research output: Contribution to journalArticle

99 Citations (Scopus)

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.

Original languageEnglish (US)
Pages (from-to)309-339
Number of pages31
JournalJournal of Finance
Volume64
Issue number1
DOIs
StatePublished - Feb 1 2009
Externally publishedYes

Fingerprint

Workers
Managers
Chief executive officer
Employees
Corporate governance
Private benefits
Headquarters
Ownership
Wage bargaining
CEO pay
Public firm
Managerial entrenchment
Employee compensation
Financial incentives
Managerial ownership
Cash flow rights
Social relations

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Do entrenched managers pay their workers more? / Cronqvist, Henrik; Heyman, Fredrik; Nilsson, Mattias; Svaleryd, Helena; Vlachos, Jonas.

In: Journal of Finance, Vol. 64, No. 1, 01.02.2009, p. 309-339.

Research output: Contribution to journalArticle

Cronqvist, H, Heyman, F, Nilsson, M, Svaleryd, H & Vlachos, J 2009, 'Do entrenched managers pay their workers more?', Journal of Finance, vol. 64, no. 1, pp. 309-339. https://doi.org/10.1111/j.1540-6261.2008.01435.x
Cronqvist, Henrik ; Heyman, Fredrik ; Nilsson, Mattias ; Svaleryd, Helena ; Vlachos, Jonas. / Do entrenched managers pay their workers more?. In: Journal of Finance. 2009 ; Vol. 64, No. 1. pp. 309-339.
@article{99ec58e9326e48f0818de4a6c37bf8be,
title = "Do entrenched managers pay their workers more?",
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.",
author = "Henrik Cronqvist and Fredrik Heyman and Mattias Nilsson and Helena Svaleryd and Jonas Vlachos",
year = "2009",
month = "2",
day = "1",
doi = "10.1111/j.1540-6261.2008.01435.x",
language = "English (US)",
volume = "64",
pages = "309--339",
journal = "Journal of Finance",
issn = "0022-1082",
publisher = "Wiley-Blackwell",
number = "1",

}

TY - JOUR

T1 - Do entrenched managers pay their workers more?

AU - Cronqvist, Henrik

AU - Heyman, Fredrik

AU - Nilsson, Mattias

AU - Svaleryd, Helena

AU - Vlachos, Jonas

PY - 2009/2/1

Y1 - 2009/2/1

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=58949087712&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=58949087712&partnerID=8YFLogxK

U2 - 10.1111/j.1540-6261.2008.01435.x

DO - 10.1111/j.1540-6261.2008.01435.x

M3 - Article

AN - SCOPUS:58949087712

VL - 64

SP - 309

EP - 339

JO - Journal of Finance

JF - Journal of Finance

SN - 0022-1082

IS - 1

ER -