Impacts of CEO Incentives and Power on Employee Wages

• 영문명: Impacts of CEO Incentives and Power on Employee Wages
• 발행기관: The International Academy of Global Business and Trade
• 저자명: Qianqian Li Yong Jae Shin Unyong Pyo
• 간행물 정보: 『Journal of Global Business and Trade』Vol. 18, No. 6, 33~57쪽, 전체 25쪽
• 주제분류: 사회과학 > 무역학
• 파일형태: PDF
• 발행일자: 2022.12.31

영문 초록

Purpose - This study investigates the impact of CEO incentive compensation and power on employee wages. While CEO compensation negatively affects employee wages, powerful CEOs may care for employees, and their compensation can have positive impacts on employee wages. Design/Methodology/Approach - Using data from US capital markets during 1992 - 2017, we employ pay-performance sensitivity to measure incentive compensation and CEO pay slices to proxy CEO power. We also examined the potential interaction effects between CEO compensation and CEO power. We conduct a Heckman two-step analysis to address potential sample bias and two-stage regression to address potential endogeneity. Findings - While incentive compensation negatively affects employee wages, CEO power positively affects employee wages. When examining the interaction effect between incentive compensation and CEO power, we note that the incentive effect is negative on employee wages only when the CEO is less powerful. However, when the CEO is more powerful, the incentive effect is positive on employee wages. Research Implications - When firms grant incentive compensation to CEOs for firm performance, they must also consider CEO power. Our results imply that CEO incentive compensation has a positive impact on employee wages when a CEO becomes more powerful. More incentive compensation to less-powerful CEOs could suppress employee wages and hurt firm performance in the long run.

목차

Ⅰ. Introduction

Ⅱ. Literature Review and Hypotheses

Ⅲ. Data and Methodology

Ⅳ. Results

Ⅴ. Conclusion

References

키워드

agency conflicts CEO incentive compensation CEO pay slice employee wages pay-performance sensitivity