This paper explains the amount of disapproval faced by firms that overpay their CEO by integrating signaling and categorization theories. We argue that, in contexts characterized by intense scrutiny, ambivalent signals sent by firms suspend categorization by stakeholders, leading to further disapproval, whereas ambiguous signals represent a form of category straddling that attenuates disapproval. We find empirical support for this proposition in the context of CEO overcompensation in the U.S. (1995-2007) after examining two organizational signals that affect perceptions of economic fairness (i.e. corporate philanthropy) and social fairness (i.e. employee diversity). Our integration of the signaling and categorization literatures adds to extant knowledge on firm’s social evaluations and recasts CEO compensation research within the literature on information intermediaries.
|Number of pages||42|
|Publication status||Published - 2015|
|Event||The 15th European Academy of Management Conference (EURAM) 2015: Uncertainty is a Great Opportunity - Warsaw, Poland|
Duration: 17 Jun 2015 → 20 Jun 2015
Conference number: 15
|Conference||The 15th European Academy of Management Conference (EURAM) 2015|
|Period||17/06/2015 → 20/06/2015|
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Vergne, J-P., Wernicke, G., & Brenner, S. (2015). Smoke Signal or Smoke Screen? Why the Media Do Not Disapprove Equally or Overpaid CEOs. Paper presented at The 15th European Academy of Management Conference (EURAM) 2015, Warsaw, Poland.