IDEAS home Printed from https://ideas.repec.org/a/wly/camsys/v20y2024i4ne70003.html
   My bibliography  Save this article

PROTOCOL: Is the CEO/employee pay ratio related to firm performance in publicly traded companies?

Author

Listed:
  • Denise M. Rousseau
  • Cédric Velghe
  • Ryan Splenda
  • Byeong Jo Kim
  • Jangbum Lee

Abstract

One goal of this systematic review is to assess whether the pay ratio, that is, the relative difference between the compensation a firm's CEO receives and that of its nonmanagerial employees, is related to subsequent firm performance. A second goal is to identify factors influencing this relationship across publicly traded firms, including the pay ratio's perceived fairness by employees, the firm's business strategy, and related factors.

Suggested Citation

  • Denise M. Rousseau & Cédric Velghe & Ryan Splenda & Byeong Jo Kim & Jangbum Lee, 2024. "PROTOCOL: Is the CEO/employee pay ratio related to firm performance in publicly traded companies?," Campbell Systematic Reviews, John Wiley & Sons, vol. 20(4), December.
    • Handle: RePEc:wly:camsys:v:20:y:2024:i:4:n:e70003
    DOI: 10.1002/cl2.70003
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/cl2.70003
    Download Restriction: no
    File URL: https://libkey.io/10.1002/cl2.70003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-280, April.
    2. De Angelis, David & Grinstein, Yaniv, 2020. "Relative Performance Evaluation in CEO Compensation: A Talent-Retention Explanation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 55(7), pages 2099-2123, November.
    3. Antonio Falato & Dan Li & Todd Milbourn, 2015. "Which Skills Matter in the Market for CEOs? Evidence from Pay for CEO Credentials," Management Science, INFORMS, vol. 61(12), pages 2845-2869, December.
    4. Newton, Ashley N., 2015. "Executive compensation, organizational performance, and governance quality in the absence of owners," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 195-222.
    5. Denise Rousseau & Byeong Jo Kim & Ryan Splenda & Sarah Young & Jangbum Lee & Donna Beck, 2023. "Does chief executive compensation predict financial performance or inaccurate financial reporting in listed companies: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 19(4), December.
    6. repec:eme:mfppss:v:34:y:2008:i:8:p:524-536 is not listed on IDEAS
    7. Marianne Bertrand & Sendhil Mullainathan, 2001. "Are CEOs Rewarded for Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 901-932.
    8. Gan, Huiqi & Park, Myung Seok, 2016. "Are more able CEOs getting more compensated? Evidence from the pay-for-performance sensitivity of equity-based incentives," Advances in accounting, Elsevier, vol. 34(C), pages 64-76.
    9. Michael C. Jensen & Kevin J. Murphy, 2010. "CEO Incentives—It's Not How Much You Pay, But How," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 64-76, January.
    10. Phyllis A. Siegel & Donald C. Hambrick, 2005. "Pay Disparities Within Top Management Groups: Evidence of Harmful Effects on Performance of High-Technology Firms," Organization Science, INFORMS, vol. 16(3), pages 259-274, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Sophia Li & Habib, Ahsan & Huang, Hedy Jiaying, 2019. "Tournament incentives and stock price crash risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 54(C), pages 93-117.
    2. Sun, Sophia Li & Habib, Ahsan, 2020. "Determinants and consequences of tournament incentives: A survey of the literature in accounting and finance," Research in International Business and Finance, Elsevier, vol. 54(C).
    3. Han, Feng & Tee, Kienpin & Hao, Siyuan & Xiong, Rancen, 2024. "Does unfairness reduce efficiency? Within-industry CEO pay inequity and firm efficiency in China," Finance Research Letters, Elsevier, vol. 62(PA).
    4. Ahmed, Shaker & Ranta, Mikko & Vähämaa, Emilia & Vähämaa, Sami, 2023. "Facial attractiveness and CEO compensation: Evidence from the banking industry," Journal of Economics and Business, Elsevier, vol. 123(C).
    5. Christian Grund & Niels Westergaard-Nielsen, 2008. "The Dispersion of Employees' Wage Increases and Firm Performance," ILR Review, Cornell University, ILR School, vol. 61(4), pages 485-501, July.
    6. Te Bao & Edward Halim & Charles N. Noussair & Yohanes E. Riyanto, 2021. "Correction: Managerial incentives and stock price dynamics: an experimental approach," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 649-649, June.
    7. Li, Wentao & Wang, Xiaoke & Yu, Lisheng, 2024. "Executive pay restrictions, political promotion, and firm efficiency: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    8. Do, Truc & Zhang, Huai & Zuo, Luo, 2022. "Rocking the boat: How relative performance evaluation affects corporate risk taking," Journal of Accounting and Economics, Elsevier, vol. 73(1).
    9. Uygur, Ozge, 2019. "Income inequality in S&P 500 companies," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 52-64.
    10. Vicente Cuñat & Maria Guadalupe, 2009. "Globalization and the Provision of Incentives inside the Firm: The Effect of Foreign Competition," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 179-212, April.
    11. Ziyan Tan & Xiaobo Wu & Ruhui Chu, 2024. "Impact of Pay Gap on Innovation Performance: The Moderating Role of Top Management Team Diversity," Sustainability, MDPI, vol. 16(17), pages 1-15, August.
    12. Baik, Bok & Evans, John H. & Kim, Kyonghee & Yanadori, Yoshio, 2016. "White collar incentives," Accounting, Organizations and Society, Elsevier, vol. 53(C), pages 34-49.
    13. Guo, Xiaohu & Gupta, Vishal K. & Jackson, William E. & Mortal, Sandra C., 2021. "Is there a racial gap in CEO compensation?," Journal of Corporate Finance, Elsevier, vol. 69(C).
    14. Mathijs de Vaan & Benjamin Elbers & Thomas A. DiPrete, 2019. "Obscured Transparency? Compensation Benchmarking and the Biasing of Executive Pay," Management Science, INFORMS, vol. 65(9), pages 4299-4317, September.
    15. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    16. Chenli Yin & Dan Li & Maria Paz Salmador, 2022. "Institutional change of compensation policy and its impact on CEO turnover and firm performance," Review of Managerial Science, Springer, vol. 16(8), pages 2527-2552, November.
    17. Bruno S. Frey & Margit Osterloh, "undated". "Yes, Managers Should be Paid Like Bureaucrats," IEW - Working Papers 187, Institute for Empirical Research in Economics - University of Zurich.
    18. Joan Wiggenhorn & Seema Pissaris & Kimberly Gleason, 2016. "Powerful CEOs and employee relations: evidence from corporate social responsibility indicators," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 85-104, January.
    19. Fernando Núñez & Ángel Arcos-Vargas & Carlos Usabiaga & Pablo Álvarez-de-Toledo, 2022. "On directors’ compensation: a multilevel analysis of Spanish listed companies," Empirical Economics, Springer, vol. 63(4), pages 2173-2207, October.
    20. Jason W. Ridge & Federico Aime & Margaret A. White, 2015. "When much more of a difference makes a difference: Social comparison and tournaments in the CEO's top team," Strategic Management Journal, Wiley Blackwell, vol. 36(4), pages 618-636, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:camsys:v:20:y:2024:i:4:n:e70003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1891-1803 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.