Corporate Power and the CEO Pay Ratio

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Abstract/Contents

Abstract: The increase of the CEO pay ratio has been a concerning development. This increase has occurred during a period of industrial transformation, decreasing business dynamism, and growing market and employment concentration. The number of public firms is decreasing, but those at the top are increasing in size and represent a growing proportion of GDP. These changes are intrinsically linked to a rise in corporate power. Using a large panel dataset of US firms between 1992 and 2020, this study finds that these trends play a significant role in the growth of the CEO pay ratio. Specifically, the number of publicly listed firms is negatively linked with the CEO pay ratio, the firm’s employment share of its industry’s workforce is positively linked, and being among the largest firms by number of employees is positively linked. The impact of the latter on the CEO pay ratio has been increasing over time. While not every factor behind these trends is identified in this study, it offers insights into the potential determinants and the role of the CEO pay ratio as a driver of income inequality in the context of increased corporate power.

Author	Pez, Nicholas
Thesis advisor	Eberhart, Robert
Department	Public Policy Program
Degree granting institution	Stanford University

DOI	https://doi.org/10.25740/sd778jj5694
Location	https://purl.stanford.edu/sd778jj5694

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License: This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).

Preferred citation: Pez, N. (2021). Corporate Power and the CEO Pay Ratio. Stanford Digital Repository. Available at https://purl.stanford.edu/sd778jj5694

Stanford University, Public Policy Program, Masters Theses and Practicum Projects

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