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Do Equity Markets Care about Income Inequality? Evidence from Pay Ratio Disclosure
We examine equity markets’ reaction to the first-time disclosure of the CEO-worker pay ratio by U.S. public companies in 2018. We find that firms disclosing higher pay ratios experience significantly lower abnormal announcement returns. Firms whose shareholders are more inequality-averse experience a more negative market response to high pay ratios. Furthermore, during 2018 more inequality-averse investors rebalance their portfolios away from stocks with a high pay ratio relative to other investors. Our results suggest that equity markets are concerned about high within-firm pay dispersion, and investors’ inequality aversion is a channel through which high pay ratios negatively affect firm value.
Ketersediaan
| Call Number | Location | Available |
|---|---|---|
| PSB lt.dasar - Pascasarjana (Koleksi Majalah) | 1 |
| Penerbit | USA: The American Finance Asoociation 2022 |
|---|---|
| Edisi | Volume 77, Issue 2, April 2022, Pages 1371-1411 |
| Subjek | Income inequality Equity markets Pay Ratio Disclosure |
| ISBN/ISSN | 1540-6261 |
| Klasifikasi | NONE |
| Deskripsi Fisik | First published: 06 February 2022 |
| Info Detail Spesifik | The Journal of Finance |
| Other Version/Related | Tidak tersedia versi lain |
| Lampiran Berkas |