Abstract
This study introduces a novel application of Benford’s Law to measure CEO negotiation power over the pay, using deviations in the first-digit distribution of base salaries from the theoretical benchmark. Analyzing 2,379 U.S. publicly listed firms from 2001 to 2024, we find that greater deviations, indicative of stronger CEO bargaining influence, are associated with lower subsequent profitability and asset efficiency. This negative relationship is significantly amplified for female CEOs, suggesting that the performance consequences of negotiation are gendered. Further analysis reveals heterogeneity in the long-term implications: while negotiation power undermines the persistence of profitability in weaker firms (consistent with rent extraction), it enhances persistence in high-performing firms with robust governance (consistent with efficient retention). This positive effect is particularly strong under female leadership when complemented by high ESG performance and gender-diverse boards. Our findings demonstrate that the economic impact of CEO negotiation power is not uniform but is critically contingent on gender, pre-existing firm performance, and the quality of governance.