When Opportunity Knocks, What’s the Response?: How Exogeneous Change Affects CEO Compensation

Seok-Hyun Hwang; Edward Zajac

doi:10.5465/AMPROC.2024.17659abstract

When Opportunity Knocks, What’s the Response? How Exogeneous Change Affects CEO Compensation

Seok-Hyun Hwang, Edward Zajac

Department of Management, Marketing and Information Systems

Research output: Chapter in book/report/conference proceeding › Conference proceeding › peer-review

Abstract

This study addresses ongoing debates on CEO labor market efficiency by analyzing how exogenously emerging opportunities affect a focal CEO’s compensation. More specifically, we consider whether and how a focal firm’s CEO compensation is sensitive to new demand and retention concerns, even in the face of presumed CEO labor market frictions (e.g., legal barriers and skill transferability). We also theoretically and empirically analyze potential moderators (e.g., CEO origin and education) to provide a deeper understanding of the mechanisms driving the relationship between new outside opportunities and a focal CEO’s compensation. We test our hypotheses in the context of sudden deaths of CEOs among US firms between 1997 and 2020, conceptualizing them as potential outside opportunities for industry peer CEOs. We conclude with a discussion of how our theoretical perspective and supportive findings contribute to current understanding of the determinants of CEO compensation, CEO labor market dynamics, and spillover effects.

Original language	English
Title of host publication	Academy of Management Proceedings 2024
Editors	Sonia Taneja
Publisher	Academy of Management
DOIs	https://doi.org/10.5465/AMPROC.2024.17659abstract
Publication status	Published - 1 Aug 2024
Event	84th Annual Meeting of the Academy of Management, AOM 2024 - Chicago, United States Duration: 9 Aug 2024 → 13 Aug 2024 https://aom2024.eventscribe.net/agenda.asp?pfp=Schedule (Conference Program) https://my.aom.org/ProgramDocs/2024/pdf/AOM_2024_Annual_Meeting_Program.pdf (Conference program pdf) https://aom.org/events/annual-meeting/future-annual-meetings/2024-innovating-for-the-future-policy-purpose-and-organizations (Conference Website) https://journals.aom.org/loi/amproc/group/d2020.y2024 (Conference Proceedings)

Publication series

Name	Academy of Management Proceedings
Publisher	Academy of Management
Number	1
Volume	2024
ISSN (Print)	0065-0668
ISSN (Electronic)	2151-6561

Conference

Conference	84th Annual Meeting of the Academy of Management, AOM 2024
Country/Territory	United States
City	Chicago
Period	9/08/24 → 13/08/24
Other	Innovating for the Future: Policy, Purpose, and Organizations
Internet address	https://aom2024.eventscribe.net/agenda.asp?pfp=Schedule (Conference Program) https://my.aom.org/ProgramDocs/2024/pdf/AOM_2024_Annual_Meeting_Program.pdf (Conference program pdf) https://aom.org/events/annual-meeting/future-annual-meetings/2024-innovating-for-the-future-policy-purpose-and-organizations (Conference Website) https://journals.aom.org/loi/amproc/group/d2020.y2024 (Conference Proceedings)

Access to Document

10.5465/AMPROC.2024.17659abstract

Cite this

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title = "When Opportunity Knocks, What{\textquoteright}s the Response?: How Exogeneous Change Affects CEO Compensation",

abstract = "This study addresses ongoing debates on CEO labor market efficiency by analyzing how exogenously emerging opportunities affect a focal CEO{\textquoteright}s compensation. More specifically, we consider whether and how a focal firm{\textquoteright}s CEO compensation is sensitive to new demand and retention concerns, even in the face of presumed CEO labor market frictions (e.g., legal barriers and skill transferability). We also theoretically and empirically analyze potential moderators (e.g., CEO origin and education) to provide a deeper understanding of the mechanisms driving the relationship between new outside opportunities and a focal CEO{\textquoteright}s compensation. We test our hypotheses in the context of sudden deaths of CEOs among US firms between 1997 and 2020, conceptualizing them as potential outside opportunities for industry peer CEOs. We conclude with a discussion of how our theoretical perspective and supportive findings contribute to current understanding of the determinants of CEO compensation, CEO labor market dynamics, and spillover effects.",

author = "Seok-Hyun Hwang and Edward Zajac",

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Hwang, S-H & Zajac, E 2024, When Opportunity Knocks, What’s the Response? How Exogeneous Change Affects CEO Compensation. in S Taneja (ed.), Academy of Management Proceedings 2024. Academy of Management Proceedings, no. 1, vol. 2024, Academy of Management, 84th Annual Meeting of the Academy of Management, AOM 2024, Chicago, Illinois, United States, 9/08/24. https://doi.org/10.5465/AMPROC.2024.17659abstract

When Opportunity Knocks, What’s the Response? How Exogeneous Change Affects CEO Compensation. / Hwang, Seok-Hyun; Zajac, Edward.
Academy of Management Proceedings 2024. ed. / Sonia Taneja. Academy of Management, 2024. (Academy of Management Proceedings; Vol. 2024, No. 1).

Research output: Chapter in book/report/conference proceeding › Conference proceeding › peer-review

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