• Graduate Program
    • Why study Business Data Science?
    • Research Master Business Data Science
    • Admissions
    • Facilities
    • Browse our Courses
    • PhD Vacancies
    • PhD Placements
  • Research
  • Browse our Courses
  • Events
    • Events Calendar
    • Events Archive
    • Tinbergen Institute Lectures
    • Summer School
      • Deep Learning
      • Economics of Blockchain and Digital Currencies
      • Foundations of Machine Learning with Applications in Python
      • Marketing Research with Purpose
      • Modern Toolbox for Spatial and Functional Data
      • Sustainable Finance
      • Tuition Fees and Payment
      • Tinbergen Institute Summer School Program
    • Annual Tinbergen Institute Conference archive
  • News
  • Alumni

Jochem, T., Ormazabal, G. and Rajamani, A. (2025). Why have CEO pay levels become less diverse? The Journal of Finance.

  • Journal
    The Journal of Finance

This paper documents a new stylized fact: the cross-sectional variation in CEO pay levels has declined precipitously in recent years. We offer one explanation for this decline, namely, firms are increasingly benchmarking CEO compensation to industry peers closest in size, thereby creating pay clusters. Our empirical tests provide support for this explanation and suggest that the rise of industry-size benchmarking is driven by three institutional factors: the mandatory disclosure of compensation peer groups, proxy advisory influence, and say-on-pay regulation. Our findings highlight a consequence of adopting a one-size-fits-all standard in the pay-setting process.