Observational analysis assessed the relationship between CEO pay balance and profitability in firms, indicating complex effects during crisis conditions.
This study examines how the COVID crisis affected CEO pay balance. CEO pay balance is defined as the total CEO compensation relative to the average employee's compensation and relative to the other officers' compensation. The paper focuses on the ten most valuable firms traded on NASDAQ. The previous literature has contradictory results. While some papers argue that CEOs get a pay cut in times of crisis, others argue that firms increase CEO pay to motivate the CEO to navigate the firm during these tough times. The current study also looks at the relationship between CEO pay balance and firm performance. For firm performance, the paper focuses on profitability. Does increasing the CEO's relative pay cause an increase in firm profitability? The paper contributes to both streams of research, namely, CEO pay in tough economic times, and whether increasing CEO pay contributes to the performance of a firm.
No takes yet. Share an insight, caveat, or question.
Kaya et al. (2025) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: