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Firm-level political risk and CEO compensation

Author

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  • Jeon, Chunmi
  • Han, Seung Hun
  • Hwang, Yunji

Abstract

This study examines the impact of firm-level political risk (FLPR) on CEO compensation. Firm cash flow and CEO bargaining power are examined to ascertain whether they moderate this relationship. FLPR exposure is measured using a computational linguistic method to analyze the manuscripts of firm earnings conference calls. The findings indicate that FLPR is negatively related to CEO compensation but that firm cash flow and CEO bargaining power positively moderate this relationship. These results are consistent with endogeneity and robustness tests, including alternative measures of FLPR and CEO compensation.

Suggested Citation

  • Jeon, Chunmi & Han, Seung Hun & Hwang, Yunji, 2025. "Firm-level political risk and CEO compensation," Research in International Business and Finance, Elsevier, vol. 73(PA).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pa:s0275531924004070
    DOI: 10.1016/j.ribaf.2024.102614
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    More about this item

    Keywords

    Political risk; Firm-level; CEO compensation; Cash flow; CEO bargaining power;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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