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Do heavily-unionized companies compensate their CEOs less in periods of financial distress? Evidence from Canadian companies during the financial crisis

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  • Boodoo, Muhammad Umar

Abstract

This paper studies the strategic interaction between employee stakeholders, in particular labor unions, and top management, and evaluates the effect of the two parties’ inherent competitive rent-seeking behavior on CEO pay. Using a panel of firms listed on the S&P/TSX composite index, this paper finds that CEO compensation withstood the financial crisis despite lower and even negative corporate performance. Further, heavily-unionized companies were associated with higher CEO pay in terms of non-equity elements such as salary and pension allocations. The presence of unions had no observed effect in reducing bonuses, stock options, and restricted stock units. These findings have implications for the debate on income inequality, and the power of unions to bring about change.

Suggested Citation

  • Boodoo, Muhammad Umar, 2018. "Do heavily-unionized companies compensate their CEOs less in periods of financial distress? Evidence from Canadian companies during the financial crisis," LSE Research Online Documents on Economics 69601, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:69601
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    File URL: http://eprints.lse.ac.uk/69601/
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    References listed on IDEAS

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    More about this item

    Keywords

    Executive labor market; Economic inequality; Executive pay; Labor union; Great Recession.;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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