CEO-To-Employee Pay Ratios, Societal-Level Income Inequality, and Citizens’ Subjective Well-Being
This study examines how the mandatory disclosure of the CEO-to-employee pay ratio affects corporate behavior, specifically finding that firms with high ratios often face negative reactions from consumers and employees. Rather than significantly lowering executive pay, many companies respond to these transparency requirements by subtly adjusting their workforce or outsourcing low-wage roles to improve their reported numbers. Ultimately, while intended to curb inequality, the authors argue that without broader institutional pressure, these disclosures may lead to strategic window-dressing…
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