Is Pay a Matter of Values?


  • We are grateful to Jose Liberti, Ron Masulis, David Robinson, Hannes Wagner, and seminar participants at the CEPR Summer Symposium in Financial Markets in Gerzensee, Erasmus University, and Tilburg University for comments. Adams thanks the SNS Centre for Business and Policy Studies and the Jan Wallander and Tom Hedelius Research Foundation for financial support. Giannetti acknowledges financial support from the Jan Wallanders and Tom Hedelius Foundation, the Bank of Sweden Tercentenary Foundation, and the Swedish National Research Council.

Renee Adams

Banking and Finance, Australian School of Business

University of New South Wales


NSW 2052



Public outrage over executive compensation reached an all-time high during the financial crisis. Around the world, many argued that CEOs and boards were immoral in setting their pay and pressured governments to impose restrictions on executive pay. Using a unique sample of data on human values for CEOs, we show that CEOs and directors have different values than general members of the population. CEOs and directors place more emphasis on power and achievement values than members of the population, and they emphasize self-direction values more. However, values appear to have little explanatory power for pay, in contrast to economic variables. While some CEOs may be unethical in setting their pay, our results suggest that pay is not a matter of values on average.