The Impact of U.S. News College Rankings on the Compensation of College and University Presidents

Abstract

Widespread attention to college tuition and student loan debt has resulted in increasing scrutiny of high levels of compensation for college and university administrators. Prior research has sought to identify a “pay for performance” relationship in executive compensation, but discovered no clear link between presidential salaries and performance measures. This study proposes U.S. News & World Report college rankings as a highly meaningful performance metric and employs a fixed effects regression model to determine the relationship between college rankings and presidential salary. We find a significant relationship between rank and presidential salary at public universities, but not at private universities and liberal arts colleges, consistent with an academic capitalism model.