Faculty Scholarship 1994 - Present

Empirical Investigation of the 'Halo' Effect of Financial Performance on the Relationship Between Corporate Reputation and CEO Compensation (Best Paper Award)

The popularity of the Fortune Reputation Index (FRI) can be easily discerned by a quick perusal of the management literature investigating corporate reputation, social responsibility, and stakeholder orientation (Chakravarthy, 1986; Preston & Sapienza, 1990; Conine & Madden, 1986; Fombrun, 1996). The main thrust of this paper is to empirically demonstrate the impact of a firm profitability on the corporate reputation and further investigate the ?halo? effect of financial performance on the general relationships between corporate reputation and CEO compensation. The results show that the FRI as a proxy measure of corporate reputation plays a significant role in determining how much a CEO receives in compensation within the context of executive compensation and performance linkages.