Arbeitspapier

Distributive justice and CEO compensation

This paper develops a framework for studying individuals' ideas about what constitutes just compensation for chief executive officers (CEOs) and reports estimates of just CEO pay and the principles guiding ideas of justice. The sample consists of students pursuing a Master of Business Administration (MBA) degree in Sweden and the United States. The framework, based on justice theory and making use of Rossi's factorial survey method, enables assessment of ideas of fairness in CEO compensation, including (1) the just CEO compensation, in the eyes of each observer; (2) the principles of microjustice observers' ideas about who should get what based on characteristics of CEOs and their firms; and (3) principles of macrojustice ideas about the just level and dispersion in compensation across all CEOs. Our estimates yield the following main results: First, there is broad agreement on the median just CEO compensation but substantial inter-individual variation in the principles of microjustice and the other principles of macrojustice. Second, there is remarkable similarity in the distributions of the principles of microjustice and macrojustice across the MBA groups. Other important results include a pervasive gender attentiveness among MBA students and tolerance for large variability in CEO pay.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 3236

Classification
Management
Personal Income, Wealth, and Their Distributions
Subject
Justice theory
fairness
CEO compensation
factorial survey method
MBA students
gender
inequality
Gini coefficient
Atkinson measure
Theil's inequality measures
Führungskräfte
Gehalt
Verteilungsgerechtigkeit
Soziale Gerechtigkeit
Studierende
Meinung
Schweden
USA

Event
Geistige Schöpfung
(who)
Jasso, Guillermina
Meyersson Milgrom, Eva M.
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2007

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Jasso, Guillermina
  • Meyersson Milgrom, Eva M.
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2007

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