RESEARCH ARTICLE
Carbon emissions and CEO pay
Abu Amin,
Ashrafee Hossain,
Tharindra Ranasinghe,
Corresponding Author
Abu Amin
Central Michigan University, Mount Pleasant, Michigan, USA
Correspondence
Abu Amin, Central Michigan University, Mount Pleasant, MI, USA.
Email: [email protected]
Search for more papers by this authorAshrafee Hossain
Memorial University of Newfoundland, Saint John's, Newfoundland and Labrador, Canada
Search for more papers by this authorTharindra Ranasinghe
Kogod School of Business, American University, Washington, District of Columbia, USA
Search for more papers by this authorAbu Amin,
Ashrafee Hossain,
Tharindra Ranasinghe,
Corresponding Author
Abu Amin
Central Michigan University, Mount Pleasant, Michigan, USA
Correspondence
Abu Amin, Central Michigan University, Mount Pleasant, MI, USA.
Email: [email protected]
Search for more papers by this authorAshrafee Hossain
Memorial University of Newfoundland, Saint John's, Newfoundland and Labrador, Canada
Search for more papers by this authorTharindra Ranasinghe
Kogod School of Business, American University, Washington, District of Columbia, USA
Search for more papers by this authorFirst published: 25 October 2024
Abstract
Our study examines the link between firms' carbon emissions and their compensation to CEOs and finds a positive association in line with the compensating wage differentials theory. We use Donald Trump's 2016 election win as an exogenous shock to identify a causal relationship. Ruling out managerial power as an alternative explanation, the relations are stronger when firms are better governed and are more likely to be aware of their carbon risk. Additionally, we present evidence that high carbon emissions increase CEOs' risk of job loss, reinforcing the presence of compensating wage differentials as the plausible explanation for the positive association.
Open Research
DATA AVAILABILITY STATEMENT
Data are available from the sources identified in the paper.
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