The Effects of Abnormal Executive Pay Dispersion: Evidence from Firm Performance and Executive Turnover

초록

This study examines the relation between pay dispersion among top executives and firm performance and executive turnover. I find that deviations from normal dispersion are associated with deterioration in firm performance and higher executive turnover. I also document that a positive relation between abnormal pay dispersion and executive turnover is driven by low-ranked executives. This study contributes to the existing literature by suggesting that abnormal pay dispersion is an important factor that influences managerial behavior in addition to raw pay dispersion.

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