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Research Regarding CEO Appointments and Compensation

Moriarty, J. (2012). Justice in Compensation: A Defense. Business Ethics: A European Review, 21 (1), 64-76.

Business ethicists have written much about ethical issues in employment. Except for a handful of articles on the very high pay of chief executive officers and the very low pay of workers in overseas sweatshops, however, little has been written about the ethics of compensation. This is prima facie strange. Workers care about their pay, and they think about it in normative terms. This article's purpose is to consider whether business ethicists' neglect of the normative aspects of compensation is justified. I examine several possible justifications for neglecting compensation and show that they fail. What remains is a case for thinking that it is worthy of normative analysis.

For more information contact: Jeffrey Moriarty (

Callan, S. J., & Thomas, J. M. (2011). Executive Compensation, Corporate Social Responsibility, and Corporate Financial Performance: A Multi-equation Framework. Corporate Social Responsibility and Environmental Management. 18 (6), 332-351. (link).

Much has been discussed in various disciplines about the determinants of executive compensation. The importance of these scholarly inquiries has been underscored by the recent condemnation of high executive remuneration levels in the face of corporate failures and financial declines. Most researchers confine their analyses to single equation models that test various determinants and different measures of compensation. In this paper, we expand this approach to a multi-equation model that examines the determinants of executive compensation within a broader framework. Our specification explicitly allows for the endogeneity of executive compensation, firm financial performance, and corporate social responsibility (CSR). Chief among our findings is that this endogeneity assumption is supported, which means that financial performance and social performance are determined simultaneously. We further show that CSR is among the determinants of CEO pay, which indicates that pay-for-performance does not sufficiently explain compensation.

For more information, please contact: Scott Callan (

Moriarty, J. (2011). Does Distributive Justice Pay? Sternberg’s Compensation Ethics International Journal of Applied Philosophy, 25 (1), 33-48.

Compensation has received a great deal of attention from social scientists. Characteristically, they have been concerned with the causes and effects of various compensation schemes. By contrast, few theorists have addressed the normative aspects of compensation. An exception is Elaine Sternberg, who offers in Just Business a comprehensive theory of compensation ethics. This paper critically examines her theory, and argues that the justification she gives for it fails. Its failure is instructive, however. The main argument Sternberg gives for her theory points in the direction of a different one. This, in turns, helps us to see what a justification of Sternberg’s theory must look like. While focused on Sternberg, this paper is of general interest. It identifies what are likely to be important positions and arguments in debates about compensation ethics, and thus provides a jumping-off point for further research in this neglected area.

For more information, please contact: Jeffrey Moriarty (

Adams, SM., Gupta, A., Leeth, J. D. (2010). Maximizing compensation: Organizational level and industry gender composition effects. Gender in Management: An International Journal, 25(5), 366-385.

The purpose of this paper is to investigate differences in compensation related to gender concentrations among industries at different organization levels of management to identify gender-based patterns of compensation at the macro level not investigated in previous studies that simply suggest industry or occupational differences. Findings provide guidance for selection processes, career path management for maximizing compensation and policy-making.

For more information, please contact: Susan Adams ( or Atul Gupta ( or John Leeth (

Frumpkin, P., Keating, E. K. (2010). The Price of Doing Good: Executive Compensation in Nonprofit Organizations. Policy and Society 29 (3), 269-282.

This article examines foundational assumption that nonprofit organizations operate under a non-distribution constraint, which prohibits the paying out of excess earnings and requires instead their application to advancing the mission of the organization. We explore this topic through an examination of the determinants of nonprofit executive compensation. We find that the pay of nonprofit chief executive officers (CEOs) is strongly predicated on what managers in similar-sized organizations receive. Our analysis indicates that nonprofit executive compensation is only modestly effected by CEO performance, as measured either by improved fund-raising results or better administrative efficiency. We do find, however, evidence that CEO compensation is significantly higher in organizations where “free cash flows” are present. This finding is inconsistent with the principle of not distributing profits. We conclude by discussing the implications of this last finding on distinctive organizational identity of nonprofit organizations.

For additional information contact Liz Keating (

Kale, J. R., Reis, E., Venkateswaran, A. (2010). Promotion Incentives and Corporate Performance: Is There a Bright Side to "Overpaying" the CEO? Journal of Applied Corporate Finance, 22 (1), 119-128.

Earlier studies have shown that stronger equity-based incentives for CEOs are generally associated with better corporate performance and higher values. In this article, the authors report the findings of their recent study of the effects of promotion-based "tournament" incentives for non-CEO executives (or "VPs") on corporate performance for a large sample of companies during the 12-year period from 1993-2004.

For additional information contact Ebru Reis (

Adams, S.M., Gupta, A., Leeth, J.D. (2009) Are female executives overrepresented in precarious leadership positions? British Journal of Management, 20 (1), 1-12.

Appointments of CEOs at U.S. corporations over the years 1992-2004 are examined to test whether female executives are appointed to financially precarious situations more often than males as suggested by the “glass cliff” hypothesis. Using three measures of stock-price-based financial performance and control samples, there is no support for the glass cliff for females CEOs at U.S. firms.

A copy of the article can be downloaded from the journal website:

For additional information contact any of the authors:

Susan Adams (

Atul Gupta (

John Leeth (

Minnick, K. L., Zhao, M. (2009). Backdating and Director Incentives: Money or Reputation. Journal of Financial Research, XXXII (4), 449-477.

This paper investigates how director incentives affect the occurrence of firms' backdating employee stock options. Directors with more wealth tied up in stock options may pursue activities that lead to personal gain, such as option backdating, which potentially increases the option recipient's compensation. We document a positive and significant association between director option compensation and the likelihood that firms backdate stock options. Our results question the effectiveness of director option compensation in aligning the interests with those of shareholders and help to explain the recent decline in the use of director option grants by many firms.

For additional information contact Kristina Minnick (

Adams, S.M., Gupta, A., Haughton, D.M., Leeth, J.D. (2007) Gender differences in CEO compensation: Evidence from the U.S. Women in Management Review, 22 (3), 208-224.

Gender differences in compensation of CEOs during 1992-2004 are examined. Findings suggest that while women are not as highly compensated as men before coming CEO, the few women who reach the CEO position are receive similar compensation as men. Additionally, women CEOs are, on average, younger than men and have impressive work experience and education.

A copy of the article can be downloaded from the journal website.

For additional information contact any of the authors:

Susan Adams (

Atul Gupta (

Dominique Haughton (

John Leeth (

Wolfman, T.G. (2007). The Face of Corporate Leadership: Finally Posed for Major Change? New England Journal of Public Policy, 22 (1-2), 37-72.

After describing the current status of women in corporate leadership positions in the U.S. and abroad, this article analyzes the impact of recent legislative and regulatory changes, the strength of the business case for diversity at the top, and a variety of emerging trends that may accelerate the process of advancing more women to corporate boards and executive suites. The article also provides a comprehensive overview of the literature on the increasingly important role that women play in the U.S. economy and the positive results of adding women to corporate leadership.

A copy of the article can be downloaded from the journal website:

For additional information contact the author Toni Wolfman (