Shareholder Implications of Anti-Esg News : Evidence from the 100 Most Overpaid CEOS

I examine how negative ESG news distorts shareholder outcomes. In 2015 As You Sow began the yearly release of "The 100 Most Overpaid CEOs" list, leading to negative ESG news for firms that make the list. Overpaying CEOs is a governance concern as it signals a failure in proper controls and a social concern as it creates a negative perception of the company concerning shareholder and employee treatment. An equal-weighted (value-weighted) portfolio of the listed firms earned an annual six-factor alpha of -3.60% (-2.64%). The underperformance is especially acute for firms that pay their CEOs above-average wages