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Impacts of Top Five Executives¡¯ Compensation on Employee Wages

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  • Qianqian Li
  • Unyong Pyo

Abstract

This paper studies the impacts of incentive compensation to top five executives on employee wages. We employ pay-performance sensitivity to measure executive incentive compensation. Using the sample during 1992 ¨C 2017, we find that executive compensation has negative impacts on employee wages. In addition, we examine the impacts of executive incentive compensation on employee wages in different industries and find that the impacts are more severe in technology firms than in non-technology firms. Finally, we show that the executives with higher incentive compensation are more likely to suppress employee wages in financially safe firms. Our results suggest that while top management teams are compensated as a team on average, they are compensated as isolated individuals on other aspects. Furthermore, firm performance may not always improve in the long run by granting high incentive compensation to top executives.

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  • Qianqian Li & Unyong Pyo, 2021. "Impacts of Top Five Executives¡¯ Compensation on Employee Wages," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 242-259, January.
    • Handle: RePEc:jfr:ijfr11:v:12:y:2021:i:1:p:242-259
    DOI: 10.5430/ijfr.v12n1p242
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    References listed on IDEAS

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