Media and social media sentiment and CEO pay cuts
研究媒体和社交媒体情绪如何影响CEO减薪决策及市场反应，发现负面情绪越强，公司越可能减薪，但市场通常不欢迎减薪。
Purpose This study investigates the relationship between media and social media sentiment and the likelihood of CEO pay cuts. The purpose is to examine whether and how these pay cuts influence market reactions. The study aims to provide insights into how external sentiment affects corporate decision-making and market perceptions, particularly in the context of CEO compensation. Design/methodology/approach Using a sample of 6,331 firm-year observations from 2015 to 2021, this paper employs quantitative analysis to assess the association between media and social media sentiment and CEO pay cuts. We utilise company DEF14A SEC filings to identify CEO pay cut dates and capture traditional media and Twitter sentiment 30-days prior to these filing dates. Findings We find a negative association between media and social media sentiment and CEO pay cuts, indicating that firms facing more negative sentiment are more likely to engage in pay cuts. We find evidence that CEO pay cuts are negatively correlated with market reactions, suggesting markets generally do not seem to favour decisions to cut CEO pay. This relationship, however, is complex and influenced by multiple factors, including the nature of sentiment and the specific components of CEO compensation. Research limitations/implications The study faces limitations in identifying the varying degrees of pay cuts and their motivations. Additionally, the content of news articles and Twitter posts used to measure sentiment was not specifically identified, which may affect the accuracy of sentiment measurement. Practical implications This research offers valuable insights for managers and corporate decision-makers, highlighting the potential impact of public sentiment on critical executive compensation decisions. Social implications The study underscores the influence of media and social media in shaping public opinion and driving corporate actions, highlighting the growing intersection between social perceptions and corporate governance. This has broader implications for how firms engage with media platforms and manage their public image, particularly in the realm of executive compensation. Originality/value We are the first to study the impact of media and social media sentiment on CEO compensation decisions and market reactions. By employing DEF14A filings as event dates for market reaction studies, we offer a novel approach to analysing the impact of executive compensation changes on market behaviour.