Networks and the Finance Wage Premium
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School of Business |
Bachelor's thesis
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Authors
Date
2018
Department
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
33
Series
Abstract
Existing literature has tried to explain the surging wage premium within the financial industry since the 1980s. A widely proposed explanation, increased number of skilled workers, was proven wrong by Metzker and Bohm in 2015, which started new speculations about the possible explanations for higher relative wages in finance. This study provides previously undocumented evidence about the relationship between executive connectedness and the finance wage premium. I use similar methods as Engleberg, Gao and Parsons (2013) for constructing each executive’s connectedness and find that executives in finance receive excess pay for their connections in comparison to other industries. Furthermore, I find that the networks of executives have a positive impact on firm performance in the financial sector but not in other sectors. My sample consists of 29,000 executives of large listed firms in the U.S. for the years 2000-2014. My results are robust for additional tests and controls.Description
Thesis advisor
Onal, BunyaminKeywords
social networks, finance, wage premium, compensation