Journal of Financial Economics Vol. 135 No. 2 2020

An ill wind? Terrorist attacks and CEO compensation

Yunhao Dai¹; P. Raghavendra Rau²; Aris Stouraitis³; Weiqiang Tan³

¹ Huazhong University of Science and Technology · ² University of Cambridge · ³ Hong Kong Baptist University

Abstract

Using multiple measures of attack proximity, we show that CEOs employed at firms located near terrorist attacks earn an average pay increase of 12% after the attack relative to CEOs at firms located far from attacks. CEOs at terrorist attack-proximate firms prefer cash-based compensation increases (e.g., salary and bonus) over equity-based compensation (e.g., options and stocks granted). The effect is causal and it is larger when the bargaining power of the CEO is high. Other executives and workers do not receive a terrorist attack premium.

DOI

10.1016/j.jfineco.2019.06.005

Volume

135

Issue

2

Pages

379-398

Language

en

Sources

crossref bibtex:phds-export.bib openalex

Cite

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