Social Capital at the Top: Effects of Social Similarity and Status on CEO Compensation

Social Capital at the Top: Effects of Social Similarity and Status on CEO Compensation

By
Maura A. Belliveau, Charles A. O’Reilly, James B. Wade
The Academy of Management Journal. December
1996, Vol. 39, Issue 6, Pages 1568-1593

This study explored the effects of social capital, measured both absolutely and relatively, on CEO compensation in a sample of 61 CEO-compensation committee chairperson dyads. We controlled for variables representing economic, social comparison, and other social influence explanations for CEO compensation. Social similarity did not influence pay, but a chair’s absolute social capital and a CEO’s social capital relative to his or her chair’s significantly increased CEO compensation. The potential of social capital explanations to increase understanding of the executive wage-setting process beyond that derived from simple economic theories is discussed.