CEOs are Compensated, Valued More by Conservative (vs Liberal) Boards

“Our main idea was that conservative- and liberal-leaning boards will differ in the importance they place in the CEO position, as prior research has shown that conservatives are, by and large, more likely to attribute outcomes to person-based factors as opposed to situational factors. To the extent that conservative boards perceive that CEOs are more important to firm success, they should pay them more.” Wowak says this same reasoning should compel conservative boards to assign CEOs more credit (or blame) for good (or poor) firm performance, a result of which is that their CEOs’ pay will depend more heavily on recent performance.