Keeping Up with CEO Jones: Benchmarking and Executive Compensation

This paper seeks to understand the role that peer comparisons play in the determination of executive compensation. I exploit a recent change in the Securities and Exchange Commission’s regulations that requires firms to disclose the peer companies used for determining the compensation of their top executives. Using a new dataset of S&P 900 companies’ choice of benchmarking firms during two fiscal periods (2007 and 2008), I investigate what determines the choice of comparison firms. I find that companies have a preference for choosing larger and higher-CEO-compensation firms as their benchmark. Though I find that companies prefer to choose as their benchmark peers with similar firm characteristics, for CEO compensation, this effect is countered by a preference for firms with higher-than-own CEO compensation. Using the complete map of firms’ choices, I implement an instrumental variable strategy that uses the characteristics of peers-of-peers to estimate the effect of others’ compensation on own compensation. For Fiscal Year 2007, I find an elasticity of 0.5

Social Interactions and Labor Market Outcomes of War Veterans: Dissertation Summary

Social networks play an important role in the labor market. Various surveys document that from 30 to 60 percent of jobs are found through friends or relatives. To better understand how networks operate in the labor market, I examine how networks that were formed involuntarily as a result of military drafts in the American Civil War and the First World War affect the postwar labor market outcomes of veterans in 1880, 1900, and 1930

Executive Compensation and Peer Benchmarking

Executive compensation has risen considerably since the 1980s and continues to attract attention from shareholders, policy makers, and the public at large. This research seeks to understand the role that comparisons and peer benchmarking play in the continued increase of executive compensation. To do so, the author exploits a recent change in the United States Securities and Exchange Commission (SEC) regulations regarding executive compensation that requires firms to disclose the peer companies used for determining compensation