Symmetry in Pay for Luck. (21st September 2019)

• Record Type: Journal Article
• Authors: Daniel, Naveen D; Li, Yuanzhi; Naveen, Lalitha
• Editors: Cornelli, Francesca
• Is Part Of: Review of financial studies. Volume 33:Number 7(2020)
• Page Start: 3174
• Page End: 3204
• Publication Date: 2019-09-21
• Subjects: Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1093/rfs/hhz057
• Languages: English
• ISSNs: 0893-9454

Abstract

Abstract: In this study, we take a comprehensive look at asymmetry in pay for luck, which is the finding that CEOs are rewarded for good luck, but are not penalized to the same extent for bad luck. Our main takeaway, which is based on over 200 different specifications, is that there is no asymmetry in pay for luck. Our finding is important given that the literature widely accepts the idea of asymmetry in pay for luck and typically points to this as evidence of rent extraction. ( JEL G32, G34) Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.