WSU finance professors publish in Strategic Management Journal
Wayne State University School of Business Administration researchers Sudip Datta and Mai Iskandar-Datta have had a research article accepted by Strategic Management Journal, one of the top academic journals in the field of management.
The article, titled "Upper-Echelon Executive Human Capital and Compensation: Generalist vs. Specialist Skills," examines differences in executive compensation based on specific personal educational backgrounds and skillsets. Specifically, the article examines the pay of chief financial officers with a "strategic" versus an "accounting" background, and determines that the elite strategic CFOs – those who have M.B.A. degrees from top schools – consistently command higher compensation than their counterparts.
A full abstract of the article is below.
Sudip Datta is T. Norris Hitchman Endowed Chair, professor of finance and interim chair of the Department of Finance in the School of Business Administration.
Mai Iskandar-Datta is a professor of finance, Board of Visitors Fellow and Dean’s Research Chair in the School of Business Administration.
Upper-Echelon Executive Human Capital and Compensation: Generalist vs. Specialist Skills
This study extends current knowledge of upper echelon executive compensation beyond the CEO, specifically CFO compensation, based on whether they possess generalist or specialist skills. We find that ‘strategic’ CFOs with an elite MBA (generalist) consistently command a compensation premium, while ‘accounting’ CFOs (specialist) and CFOs with a non-MBA master’s degree, even from an elite institution, do not. Further, scarce ‘strategic’ CFOs are awarded both higher salaries and higher equity-based compensation. Our findings support the view that unique complementarities between scarce CFOs and the firm increase these executives’ bargaining power leading to pay premium. Our results are robust to post-hiring years, firm sizes, and CFO’s insider/outsider status. We contribute at the confluence of upper echelon compensation, executive human capital, resource-based view, and assortative matching literatures.