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The relative CEO to employee pay for luck

Author

Listed:
  • Yixi Ning

    (University of Houston - Victoria)

  • Chien-Ping Chen

    (University of Houston - Victoria)

  • Yingxu Kuang

    (University of Houston - Victoria)

Abstract

In this study, we fill the void in the literature by examining relative CEO to employee pay for luck and pay asymmetry phenomena over 72 years from 1949 to 2020. We find that CEO pay for luck and the asymmetric benchmarking of the pay exist for CEOs as well as median employees. However, CEOs have a more robust pay for luck and a more pronounced pay asymmetry than median employees. Furthermore, we find that the corporate pay-related regulations implemented in the 2000s have achieved their intended goal of mitigating pay inequity between CEOs and median employees. It lowers the degree of CEO pay for luck and asymmetry compared to median employees. Our findings shed new insights on CEO and employee pay for non-performance to academia, regulators, and shareholders.

Suggested Citation

  • Yixi Ning & Chien-Ping Chen & Yingxu Kuang, 2024. "The relative CEO to employee pay for luck," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(3), pages 924-946, September.
    • Handle: RePEc:spr:jecfin:v:48:y:2024:i:3:d:10.1007_s12197-024-09682-x
    DOI: 10.1007/s12197-024-09682-x
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    References listed on IDEAS

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    More about this item

    Keywords

    CEO pay for luck and asymmetry; Employee pay for luck and asymmetry; CEO pay ratio;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • G3 - Financial Economics - - Corporate Finance and Governance

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