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Powerful CEOs and employee relations: evidence from corporate social responsibility indicators

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  • Joan Wiggenhorn
  • Seema Pissaris
  • Kimberly Gleason

Abstract

In this paper, we investigate whether powerful CEOs who dominate the top management team exhibit positive or negative behavior towards their employees. Somewhat surprisingly, we find that CEO power as evidenced by high pay disparity between the CEO and top management, results in positive Employee Relations as measured by the KLD Statistics. We also find that CEO power affects the individual categories of Employee Involvement as well as Employee Health and Safety, indicating that pay disparity positively effects Employee Relations on a number of measures. However, the strong positive relationship is not found when the CEO holds the dual role of Chairman. In addition, neither measure tests positive for union relations, although high profitability, as measured by industry adjusted Return on Assets, appears to permit firms to have positive relations with employees on a number of different measures. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • 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.
    • Handle: RePEc:spr:jecfin:v:40:y:2016:i:1:p:85-104
    DOI: 10.1007/s12197-014-9295-1
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    Cited by:

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    2. Bristy, Humyra Jabeen & Han, Jianlei & Tian, Gary Gang, 2022. "CEO power and labor-friendly policy," Pacific-Basin Finance Journal, Elsevier, vol. 71(C).
    3. Schochet, Sholom & Benlemlih, Mohammed & Jaballah, Jamil, 2022. "Is corporate tax avoidance related to employee treatment?," Journal of Empirical Finance, Elsevier, vol. 69(C), pages 63-80.
    4. Unsal, Omer & Brodmann, Jennifer, 2020. "The impact of employee relations on the reputation of the board of directors and CEO," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 372-388.
    5. Jiang, Haiyan & Hu, Yuanyuan & Su, Kun & Zhu, Yanhui, 2021. "Do government say-on-pay policies distort managers’ engagement in corporate social responsibility? Quasi-experimental evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).

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    More about this item

    Keywords

    CEO compensation; CEO pay disparity; Powerful CEOs; Employee relations; KLD measures; M14;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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