Why Has CEO Pay Increased So Much?

Gabaix, Xavier; Landier, Augustin

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DC Field	Value	Language
dc.contributor.author	Gabaix, Xavier	-
dc.contributor.author	Landier, Augustin	-
dc.date.accessioned	2008-05-11T09:35:02Z	-
dc.date.available	2008-05-11T09:35:02Z	-
dc.date.issued	2006-07-21	-
dc.identifier.uri	http://hdl.handle.net/2451/25984	-
dc.description.abstract	This paper develops a simple equilibrium model of CEO pay. CEOs have different talents and are matched to firms in a competitive assignment model. In market equilib-rium, a CEO’s pay changes one for one with aggregate firm size, while changing much less with the size of his own firm. The model determines the level of CEO pay across firms and over time, offering a benchmark for calibratable corporate finance. The six- fold increase of CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization of large US companies during that period. We find a very small dispersion in CEO talent, which nonetheless justifies large pay differences. The data broadly support the model. The size of large firms explains many of the pat-terns in CEO pay, across firms, over time, and between countries. (JEL D2, D3, G34, J3).	en
dc.language.iso	en_US	en
dc.relation.ispartofseries	CLB-06-011	en
dc.subject	Executive compensation	en
dc.subject	wage distribution	en
dc.subject	corporate governance	en
dc.subject	Roberts’law	en
dc.subject	Zipf ’s law	en
dc.subject	scaling	en
dc.subject	extreme value theory	en
dc.subject	superstars	en
dc.subject	calibratable corporate finance	en
dc.title	Why Has CEO Pay Increased So Much?	en
dc.type	Working Paper	en
Appears in Collections:	NYU Pollack Center for Law & Business Working Papers

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