Abstract
The usefulness of the CEO-to-employee pay ratio disclosure to investors is subject to significant debate. Our experiment examines participant responses to higher-than-industry and comparable-to-industry pay ratio disclosures in a restaurant company. A prior experiment by Kelly and Seow (2016) (hereafter KS) focused on a R&D-intensive semiconductor company and found that incrementally disclosing a higher-than-industry pay ratio on top of higher-than-industry CEO pay had indirect negative effects on the company’s perceived investment potential, via negative perceptions about the fairness of the CEO pay and workplace climate. We find that the negative indirect effects of pay ratio disclosures on perceived investment potential in KS are replicable in our study, and for a less extreme comparable-to-industry pay ratio. We do not find evidence that the effects of incremental pay ratio disclosure on investor perceptions are stronger when the pay ratio is higher-than-industry rather than comparable-to-industry. Our study suggests that the ability of pay ratio disclosures to impact investor perceptions extends across a range of pay ratios.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
