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Entrenchment or efficiency? CEO-to-employee pay ratio and the cost of debt
Financial Review Pub Date : 2021-02-01 , DOI: 10.1111/fire.12256
Katsiaryna Bardos 1 , Steven E. Kozlowski 1 , Michael R. Puleo 1
Affiliation  

Using new data on S&P 1500 firms’ chief executive officer (CEO)-to-employee pay ratios disclosed by mandate of Section 953(b) of the Dodd–Frank Act, we examine the effect of within-firm pay inequality on bond yield spreads. We find a significant negative relation between industry-adjusted CEO-to-employee pay ratio and yield spreads while controlling for covariates and endogeneity. This result is strongest in financially constrained, labor-intensive, and small-to-medium-sized firms. The evidence supports the incentive-provision explanation of CEO-to-employee pay disparity, reflecting efficient CEO compensation rather than rent extraction. We also document selection bias in self-reported pay ratios, highlighting the efficacy of the Dodd–Frank provisions.

中文翻译:

巩固还是效率?CEO与员工的薪酬比率和债务成本

使用《多德-弗兰克法案》第 953(b) 条规定披露的标准普尔 1500 指数公司首席执行官 (CEO) 与员工薪酬比率的新数据,我们研究了公司内部薪酬不平等对债券收益率利差的影响. 我们发现,在控制协变量和内生性的同时,经行业调整的 CEO 与员工薪酬比率与收益率差之间存在显着的负相关关系。这一结果在财务受限、劳动密集型和中小型企业中最为明显。证据支持对 CEO 与员工薪酬差距的激励提供解释,反映了有效的 CEO 薪酬而不是租金提取。我们还记录了自我报告的薪酬比率中的选择偏差,突出了多德-弗兰克条款的有效性。
更新日期:2021-02-01
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