Faculty Publications

Money Isn't Everything: Compensation Of Locally Educated Executives

Document Type

Article

Keywords

Executive compensation, Geographic preference discount, Managerial incentives

Journal/Book/Conference Title

Journal of Corporate Finance

Volume

74

Abstract

We identify the location of an executive's undergraduate university education as a proxy for their geographic preference. Executives whose university education took place near a firm's headquarters are paid 4.40% to 11.01% less than their peers, suggesting the transparency of university education allows firms to use the location of their headquarters as a form of intangible compensation. This geographic preference discount persists across all levels of the C-Suite, corporate governance quality, time periods, and after controlling for opaque measures of where the executive grew up. Our study shows the location of an executive's undergraduate university is a consequential component of his or her geographic preference, and that such preference has meaningful implications for his or her compensation.

Department

Department of Finance

Original Publication Date

6-1-2022

DOI of published version

10.1016/j.jcorpfin.2022.102212

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