Profits and pay at large U.S. corporations

Taekjin Shin

Research output: Contribution to conferencePaperpeer-review

Abstract

How much do large corporations pay workers? And how do corporations pay workers - is their pay tied to the corporations' profits? Using firm-level data from 304 large U.S. corporations for the period of 1992-2005, I tested hypotheses on organizational factors that determine the level of pay and changes in pay for average workers in corporations. The results of the level of pay suggest that firms with greater profits do not necessarily pay workers more, contrary to what economists would expect. Consistent with the hypotheses drawn from organizational theories, firms managed by CEOs with functional backgrounds in finance, longer tenure at the job, or appointment from outside the organization tend to pay workers less. Regarding how changes in pay are related to changes in company profits, the results do not support the financial economists' argument; the pay-performance relationship is not stronger in firms in which top managers or institutional investors own a larger proportion of shares than in other firms in which managers have considerable discretion in controlling the organization. The results support the hypothesis that firms with CFOs have a closer pay-performance relationship.

Original languageEnglish (US)
StatePublished - Dec 1 2008
Event68th Annual Meeting of the Academy of Management, AOM 2008 - Anaheim, CA, United States
Duration: Aug 8 2008Aug 13 2008

Other

Other68th Annual Meeting of the Academy of Management, AOM 2008
CountryUnited States
CityAnaheim, CA
Period8/8/088/13/08

Keywords

  • CEO
  • Compensation
  • Corporation

ASJC Scopus subject areas

  • Management Information Systems
  • Management of Technology and Innovation

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