College Mathematics Beliefs and Belonging Survey
Category: Student Well-Being
College presidents are among the highest-paid individuals in higher education, and in 2017 the Tax Cuts and Jobs Act increased their cost to their institutions via a 21% excise tax on nonprofit executive compensation above $1 million. I examine how private colleges and universities and their presidents responded using an event study design. Presidential compensation fell by 13%, with the entire adjustment running through non-taxable and other compensation, and the probability that an institution replaced its president rose by 19 percentage points. Comparing the tax liability institutions faced with the compensation their continuing presidents lost implies that presidents bore essentially the full cost of the tax. Among presidents who stayed, institutional resources shifted toward activities more visible to governing boards: academic support and student services expenditures rose by 12% and 7%, while instructional spending and net aid were unchanged.
Keywords
college presidents, higher education leadership, executive compensation, leadership turnover, resource allocation, postsecondary governance, academic support services, governing boards, compensation policy
Education level
Document Object Identifier (DOI)
10.26300/b16a-5504
