Date of Award
9-17-2023
Degree Type
Thesis
Degree Name
Master of Philosophy (MPHIL)
Discipline
Business
Department
Finance and Insurance
First Advisor
Prof. ZHAO Xiaofeng
Second Advisor
Prof. LI Jingyuan
Abstract
People prefer an amenable location and companies have to pay a higher level of salary to their executives in a less livable place. Focusing on a particular aspect of livability, i.e. life security, we investigate whether life security condition in a region has an impact on CEOs’ compensation using the enactment of Stand Your Ground (SYG) laws in U.S. 26 states from 2003 to 2020 as an exogenous shock. SYG laws, which grant individuals the legal right to use lethal force in self-defense without the duty to retreat, have the potential to affect executives' perception of personal security and consequently, their compensation preferences. Building on a difference-in-difference approach, we find that the overall executive compensation package tends to increase following the enactment of SYG laws. On average, the passage of the SYG Laws increases total CEO compensation in firms headquartered in states adopting the laws by 3.2% relative to the increase of compensation in firms headquartered in states without adopting the laws. The results are more pronounced when firms face tougher competitiveness for talents and CEOs who have shorter tenure extract higher total pay and equity-based pay after the passage of the SYG Laws. In addition, we find that the results concentrate on regions with high crime rate, poor protective services, and high firearm ownership. This suggests that the adoption of such laws leads to a heightened concern for personal security among executives, prompting them to negotiate for additional benefits. This finding highlights the importance of personal life security in shaping executive compensation preferences.
Keywords
CEO compensation, Nonmonetary benefits, Stand Your Ground laws, Personal life security
Language
English
Copyright
The copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited.
Recommended Citation
Zeng, Z. (2023). Personal life security, nonmonetary benefits and executive compensation: Evidence from stand your ground laws (Master's thesis, Lingnan University, Hong Kong). Retrieved from https://commons.ln.edu.hk/otd/181/