Employee Pay Research Articles

Sharing the Wealth: The Effects of Announced TCJA Bonuses on Employee Pay Satisfaction

ABSTRACT Many corporations publicly announced plans to share windfalls from the Tax Cuts and Jobs Act (TCJA) with rank-and-file employees. We examine the association between these bonus announcements and workers’ pay satisfaction. Although employees are better off upon receiving the bonuses, prior literature suggests employees can be dissatisfied with awards they perceive as small or inequitable. By linking the bonuses to a corporate tax windfall, firms provided a reference point for employees to assess fairness. Using a difference-in-differences design, we find a greater decline in pay satisfaction at firms announcing a TCJA bonus relative to firms that do not. We also provide evidence of greater dissatisfaction among employees who perceive their share of the windfall as unfairly small. Considering increasing income disparity in the U.S. and a heightened focus on corporate taxes, we provide new and timely insights into how workers respond to changes in compensation linked to corporate tax savings. Data Availability: Data are available from the sources cited in the text. JEL Classifications: H25; M52.

The Effect of Executive - employee Pay Disparity on Future Executive Compensation

The Effect of Executive - employee Pay Disparity on Future Executive Compensation

The Dual Impact of Gender Homophily in Project-Based Networks on Female Employee Pay

The Dual Impact of Gender Homophily in Project-Based Networks on Female Employee Pay

Does Employee Pay Variation Increase Government Performance? Evidence From a Cross-National Analysis

Pay variation across positions, functions, and ranks can affect government performance by influencing the ability of the government to recruit and incentivize civil servants, but this proposition has not been systematically examined. Taking advantage of a new panel dataset, we develop and test the theoretical linkage between pay variation of civil servants and government performance. Our findings show a contingency-based relationship between pay variation and government performance. On average, neither total pay variation nor vertical pay variation is significantly related to government performance measured by the World Bank’s Worldwide Governance Indicators. However, total pay variation is consistently and negatively correlated with government performance in low-income countries. The findings suggest the importance of accounting for national contexts in implementing administrative reforms and are a cautionary lesson about applying theories based on research on private firms to the public sector.

Identify Variables to Measure Intellectual Capital in organizations: A Literature Review.

Currently the importance and the validity of Intellectual Capital (IC) for creating and maintaining sustaining competitive advantage for organizations has been well recognised. Swiss think-tank (Gottlieb Duttweiler Foundation) research revealed that only 20 percent of knowledge available to an organization is actually used. Therefore, IC management and measuring appeals much attention from academics and practitioners. It is revealed that existing measures of human and IC are inadequate and are not developed in par with strategy processes. This desk study aims at identifying constructs and dimensions to measure IC of an organization. A systematic literature survey was conducted to identify constructs of IC. Literature was searched in Google Scholar. Articles were searched using the string “Measuring Intellectual Capital”. Time was set as “Any Time”. There were 256 articles shown. Suitable and allowable articles were referred in this study. Additionally, articles referred by the authors of above articles were also taken into consideration As accepted by many authors who interested in this subject are, the IC consist of Human Capital (HC), Structural Capital (SC) and Relational Capital (RC). As per the literature review, to measure Human Capital Employee absenteeism, Employee attitude, Capabilities, Commitment, Competencies, Creativity, Efficiency, Employee Pay, Turnover, Experience, Expertism, Intelligence, Knowledge related indices, Disputes, Leadership qualities, Learning Training and education indices, Motivation, Performance, Satisfaction, Skills Abilities and Talents and measurements of Team work can be used. In order to measure Structural Capital Working atmosphere, Controlling systems, Corporate practices and procedures, Databases, Efficiency and Effectiveness of practices, ICT usage, Information availability, Innovation rate, Intellectual Property and trade secrets, interdisciplinary projects, Internal relationships, knowledge sharing, Management philosophy, Mutual Support, Organizational Knowledge, Processes and Systems, R&D practices, Renewal and Development, Roles responsibilities and routines, Structure and Technology can be used. And to measure Relational Ccapital, indicators related to Building customer relationships, identify customer needs, Market share, Market Potential, Brand image and trademarks, Value of Supplier, Sales and Distribution channels, Stakeholder relationships, Marketing indicators, Value of Joint ventures and SCR activities has been used.

When Does Higher Firm Leverage Lead to Higher Employee Pay?

We show that newly hired workers earn higher wages in response to higher firm leverage. Consistent with compensating differential models, these higher wages appear to reflect compensation for the risk of earnings losses in the event of financial distress. For tenured workers, increases in leverage are not associated with higher wages. Our findings suggest that the wage costs of debt and optimal capital structure for a firm depend on expected employee turnover, as well as on the firm's future growth and hiring plans. Variation in local labor market conditions also significantly affects the relationship between firm leverage and employee pay. (JEL G32, G33, J21, J31, J61) Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Profit Shifting, Employee Pay, and Inequalities: Evidence from US-Listed Companies

Profit Shifting, Employee Pay, and Inequalities: Evidence from US-Listed Companies

The Impact of Raising Employee Pay on Manager-Employee Relationships

The Impact of Raising Employee Pay on Manager-Employee Relationships

Do CEOs Benefit from Employee Pay Raises? Evidence from a Federal Minimum Wage Law

Do CEOs Benefit from Employee Pay Raises? Evidence from a Federal Minimum Wage Law

Untangling innovation: an examination of compensation, corporate social responsibility, and corporate financial performance

PurposeThis study aims to examine how highly innovative firms behave differently from their peers to become profitable. The authors investigate this through two distinct groups, one group of firms that have appeared on the Forbes 100 most innovative firms for 5 out of the past 10 years and a carefully curated control group.Design/methodology/approachUsing a matched sample of 190 distinct firms, all with 10 years of historical data, the authors conduct a series of regressions and two mediated models. This method enables the examination of several possible differentiators for highly innovative firms, namely, CEO Pay, CEO Pay Ratio, Median Employee Pay and Corporate Social Responsibility (CSR).FindingsIn all, the authors conducted five separate hypothesis tests, all with statistical significance. Of note, the authors find innovative companies do pay employees more, engage in more CSR acts and are more profitable than peer companies. In a mediated regression model, the authors also find that the median employee pay fully mediates the relationship between firm innovation and corporate financial performance.Research limitations/implicationsThe study first shows that these highly innovative firms do not reach a position to rely merely on their innovation reputation to be profitable or attract eager employees. The authors find no relationship between years on the Forbes 100 list and profitability, median pay or total CSR in the data.Practical implicationsThis research uses commonly available data to explore how innovative firms behave. Rather than being single-mindedly focused on innovation, results indicate that innovative elite firms are more generous (in employee pay) and concerned about non-profit factors (CSR) than their peers. Innovative firms are then able to do all this and remain profitable. An additional implication of this research is that managers should prioritize CSR. CSR is not just a tool for less innovative companies to distinguish themselves or firms with low reputations to rehabilitate themselves.Social implicationsAs a society, we are living through unprecedented times concerning how we treat one another in the world. Often, the argument is made that firms should specialize, optimize and be strategically focused. However, highly innovative firms (often regarded as focused, specialized and optimized) in the sample show that paying people more and carrying out CSR is highly compatible with their success.Originality/valueTo the best of the researchers’ collective knowledge, this study is the only one of its kind to create and use such a robust data set, obtaining data from four different sources, namely, 10 years of Forbes top 100 innovative companies, SEC filing of the DEF 14 A for each company for two years, the Kinder, Lyndenberg and Domini database for 10 years and Compustat data for 10 years.

CEO–Employee Pay Gap, Productivity and Value Creation

This study examines the effect of the CEO–employee pay gap on productivity and performance. Using extensive data of 751 constituents of the Standard and Poor’s (S&P) 1500 index between the years 1992–2016, we found a cubic relationship between salary differential and corporate productivity, with a rising gap adversely affecting productivity principally when it is both too low, as well as too high; intermediate pay inequality levels are less influential. A contrast in the productivity effects of the CEO–worker pay gap for firms with high average salaries and more employees was noticeable, whereas positive productivity gains were present even with a high salary gap. Thus, big companies with a highly skilled workforce are able to achieve tangible benefits through higher salary differentiation. On the other hand, companies with lower average salaries and lower capital intensity were characterized by the negative effects of wage dispersion on productivity. As a result, increasing inequality aversion is an important issue affecting performance among smaller, lower skilled labor dependent firms. Additionally, female CEOs had a significant and positive lagged effect on productivity. Finally, firm market valuation was positively stimulated by the increasing pay gap.

The Hidden Value of Employee Pay Disclosures Evidenced through Cost of Capital

Voluntary disclosure theory suggests a firm increasing its disclosures should lower the information asymmetry component of its cost of capital. However, empirical results on specific disclosures are mixed because individual disclosures may not provide enough value to investors in disclosure rich environments. Salary expense disclosures, unlike some other cost disclosures, may provide insight into increasing firm risk leading to an increased cost of capital, as employee pay has been shown to increase in response to leverage increases. We examine whether salary expense disclosures provide valuable information to investors, as measured through a disclosing firm’s cost of capital, and we find that firms that disclose salary expense receive a lowered cost of capital if they are disclosing more stable cost structures and that the value of this disclosed information relates to the relative risk associated with the disclosed cost structures. We also find the propensity for firms to initiate disclosure increases as more analysts follow the firm, and these initiating firms receive a lower cost of capital in exchange for their initial disclosure. Additionally, this lower cost of capital for initial disclosers is not based on the relative stability of the disclosed cost structure.

Pay Communication: Expanding Conceptualizations and Evidence

Organizations’ communications about their compensation systems help ensure those systems are administered efficiently; they also shape employees’ judgments and perceptions about their compensation and the organization. Research on pay communication, and in particular on pay transparency and secrecy, is currently enjoying an expansion, in part because of the view among many in the wider public, the news media, and regulators in many countries that more pay transparency is better, as transparency may inform solutions to problems such as income inequality and the gender pay gap. But what do we really know about how employees perceive and respond to transparency policies? This symposium showcases promising new research that speaks to this question. Collectively, the papers in this symposium (1) examine a variety of outcomes (pay satisfaction, counterproductive work behavior, employee pay information sharing, and competitive team climate), (2) explore contingencies under which pay transparency has more positive versus more negative effects, (3) provide insight on several individual differences affecting reactions to transparency, and (4) offer an impressive array of research designs and evidence, combining field studies and experiments, that examines phenomena at both the individual and team levels. In bringing these studies and scholars together, we hope to contribute to community building, continue to foster the dialog among researchers and practitioners attending the session, and contribute both theoretically and practically to the advancement of compensation research. How Does Pay Transparency Affect Pay Knowledge and Satisfaction? A Field Intervention Study Presenter: Alexandra Arnold; U. of Lucerne Presenter: Ingrid Fulmer; Rutgers U. Presenter: Anna Sender; U. of Lucerne Presenter: Junting Li; Rutgers U. Uncertainty and Employee Pay Disclosure: A Quasi-Experimental Study of Pay Information Exchange Presenter: Paul Bliese; Darla Moore School of Business, U. of South Carolina Presenter: Michelle Brown; U. of Melbourne Presenter: John Shields; U. Of Sydney Pay Transparency and Employee Counterproductive Work Behavior: Taking Perceived Justice into Account Presenter: Ilanit Siman Tov-Nachlieli; Tel Aviv U. Pay Secrecy, Pay Transparency, and Competitive Climate Presenter: Tae-Youn Park; Cornell U. Presenter: Aino Tenhiälä; IE Business School

Consumers Punish Firms that Cut Employee Pay in Response to COVID-19

Two experiments, including one incentive compatible study, examine the impact of cutting pay for executives versus employees in response to COVID-19 on consumer behavior. Study 1 explores the effect of announcing cuts or no cuts to CEO and employee pay, and shows that firms’ commitment to paying employees their full wages leads to the most positive consumer reactions. Study 2 further examines the effects of announcing employee and CEO pay cuts: though announcing CEO pay cuts in tandem with employee pay cuts can help mitigate the negative effects of employee pay cuts, consumers respond most positively to firms which prioritize paying employees regardless of their strategy for CEO pay. These positive perceptions are mediated by perceptions of financial pain to employees. We discuss the implications of our results for firms and policy-makers during economic crises.

Profit Shifting, Employee Pay, and Inequalities: Evidence From US-Listed Companies

Over the last few years, corporate tax avoidance has become a salient policy issue and has regularly been accused of aggravating income inequalities. Yet, systematic empirical evidence on its distributional implications remains lacking. In this paper, I explore the effect of profit shifting activities of multinational enterprises on employee pay. Using a rich database on executives, foreign subsidiaries, and financial statements of US-listed companies, I find that this effect substantially varies across occupations: while the compensation of chief executive officers and chief financial officers increases when their firm enters tax havens, non-executives, on the contrary, see their wage fall. Also, these reactions are more pronounced in intangible-intensive sectors. These new empirical findings are consistent with economic theory, cast light on the consequences of profit shifting, and might help explain recent trends in income inequalities.

Sharing the Wealth: The Effects of TCJA Bonuses on Employee Pay Satisfaction

Many corporations shared their cash windfalls from the Tax Cuts and Jobs Act (TCJA) with rank-and-file employees through bonuses, higher wages, or increased benefits. We use novel data from Culture X to examine how the announcement of TCJA bonuses affects employee sentiment about their companies’ pay practices. Although employees are economically better off upon receiving these bonuses, prior literature suggests employees could be dissatisfied after receiving bonuses that they perceive as unfairly small. Using a difference-in-difference design, we find a greater decline in pay sentiment among employees at firms announcing a TCJA bonus relative to firms that do not. Consistent with dissatisfaction about receiving an unfairly small share of the company’s tax windfall, we document a larger decline in pay sentiment at announcing firms with larger increases in CEO bonuses and larger share repurchases around the TCJA. We provide new insights into how workers respond to changes in compensation stemming from corporate tax savings.

Homophily Exclusion or Homophily Preference? The Influence of the Executive Identity of Nonexecutive Directors on the Focal Firm Executive Pay and Ordinary Employee Pay

Abstract The occupational identity of nonexecutive directors exerts a considerable influence on their way of designing and distributing executive pay as well as ordinary employee pay in the focal firm. Integrating the status characteristics theory into the corporate governance literature, I theorize that status contest effect comes into play in the process of setting executive pay in the focal firm, specifically when its nonexecutive directors serve as executives on stakeholders. More often than not, such executive identity triggers the status competition with focal firm executives, which motivates nonexecutive directors to reduce the focal firm executive pay so as to secure and aggrandize their own status within the focal firm. However, since ordinary employees pose no threat to nonexecutive directors in the focal firm, they tend to increase ordinary employee pay. Basing upon the empirical test which adopts the data of China’s Shanghai and Shenzhen A-share listed firms, I find that the greater the focal firm’s nonexecutive director ratio, the less will be the top executives’ pay in the focal firm; the greater the focal firm’s nonexecutive director ratio, the greater will be ordinary employees’ pay in the focal firm; the greater the focal firm’s nonexecutive director ratio, the smaller will be the pay gap between top executives and ordinary employees in the focal firm. In addition, I also find that ownership power and gender can moderate the relationship between nonexecutive director ratio and executive pay: top executive ownership can alleviate the negative relationship between focal firm’s nonexecutive directors and top executives’ pay; female nonexecutive directors are more likely to increase focal firm’s ordinary employee pay than their male counterparts.

Corporate Sustainability and CEO–Employee Pay Gap—Buster or Booster?

There is a general agreement that extensive remuneration gaps may cause pressing environmental, social, and economic problems. Thus, a critical question to be answered is what is the effect of being at the forefront of corporate sustainability on the CEO–employee pay gap. This paper addresses the question by examining empirical evidence from 415 constituents of the S&P 1500 index over the years 2006–2016. For the above period, we found a positive relationship between a strong commitment to sustainable development at the firm level and the CEO–employee pay differential. Additionally, firms characterized by higher performance, growth potential, and financial robustness constituted more dispersed salary distribution environments. The findings also suggest that CEO gender has a significant effect on the pay gap with a moderating influence of female CEOs. The paper contributes to the literature by shedding additional light on the urgent need for the implementation of a limit capping the CEO–worker pay ratio at a certain, responsible level as one of screening criteria used by sustainability ranking providers. Furthermore, it also shows that leading corporations in the area of sustainability do not implement any serious solutions in the above area on their own accord.

Firm Leverage, Labor Market Size, and Employee Pay

We provide estimates of the wage costs of firms' debt exploiting within-firm variation in workers' expected unemployment costs due to variation in local labor market size. We find that, following an increase in firm leverage, workers with higher unemployment costs experience higher wage growth relative to workers at the same firm with lower unemployment costs. Our estimates suggest wage costs are an important component in the cost of debt; a 10 percentage point increase in firm leverage increases wages for the median worker by 1.9% and increases total firm wage costs by 17 basis points of firm value.

The Impact of Rewards on Retention of Operational Level Employees in Three Apparel Sector Companies in Export Processing Zone in Biyagama, Sri Lanka

Area of the Study As a significant determinant of retention intention of an employee, this study is to discuss the impact of employee rewards on retention of operative level employees in three apparel sector companies in Export Processing Zone in Biyagama, Sri Lanka. Problem of the Study This research study attempts to explore the impact of employee rewards on employee retain intention of operative level employees in three apparel sector companies in Export Processing Zone in Biyagama. Therefore, the research problem of this study was; “Do the employee rewards have a significant impact on retention intention of operative level employees in three apparel sector companies in Export Processing Zone in Biyagama, Sri Lanka”. Method of the study The data were collected from a convenience sample of 196 production employees in apparel companies with a structured questionnaire, which was consisted of 42 questions with five point Likert scales. Univariate analysis as well as bivariate analysis applied to analyze data with the SPSS 16.0 (Version) Findings of the Study According to the results of the regression analysis, the R Square of the employee welfare facilities is 0.082 which means that 8.2% of the variance of employee retention is explained by employee welfare facilities, 13.2% variance of employee retention is explained by employee incentives, 37.5% variance of employee retention is explained by employee pay of operative level employees which is significant at 1% (Sig. F= 0.000). As overall 48.2% variance of employee retention is explained by the employee rewards. Conclusion of the Study Various studies examined that employee compensation, rewards and recognition affects employee turnover and retention. Employee commitment is promoted by highly competitive wage systems and it results in attraction and retention of a superior workforce. Hence the study represents that rewards have a positive effect on employee retention. Keywords: Employee Rewards, Employee Pay, Employee Incentives, Employee Welfare Facilities, Employee Retention