Rethinking measurement of pay disparity and its relation to firm performance

Ethan Rouen

I develop measures of firm-level pay disparity and examine their relation to firm performance. Using comprehensive compensation data for a large sample of firms, I find no statistically significant relation between the ratio of CEO-to-mean employee compensation and performance. I next create empirical models that allow me to separate the components of CEO and employee compensation explained by economic factors from those that are not, and use these models to estimate explained and unexplained pay disparity. After validating my estimate of unexplained pay disparity as a proxy for pay fairness, I find robust evidence of a negative (positive) relation between unexplained (explained) pay disparity and future firm performance

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Year of publication:	[2017]
Authors:	Rouen, Ethan
Publisher:	[Boston, MA] : Harvard Business School
Subject:	pay disparity \| pay ratio \| CEO pay ratio \| income inequality \| Managervergütung \| Executive compensation \| Einkommensverteilung \| Income distribution \| Lohnstruktur \| Wage structure \| Leistungsentgelt \| Performance pay \| Führungskräfte \| Managers \| Unternehmenserfolg \| Firm performance \| Großbritannien \| United Kingdom

Extent:	1 Online-Ressource (circa 72 Seiten) Illustrationen
Series:	Working papers / Harvard Business School, Division of Research. - Boston, Mass. : Harvard Business School, ISSN 0898-7629, ZDB-ID 2276801-4. - Vol. 18, 007
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	10.2139/ssrn.2867041 [DOI]
Classification:	G32 - Financing Policy; Capital and Ownership Structure ; G35 - Payout Policy ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc ; M12 - Personnel Management ; M14 - Corporate Culture; Social Responsibility ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs)
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011901700