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Capitol Report: Companies do better when CEO pay dwarfs average worker, study finds

As Democrats launch their midterm agenda focused in large part on reigning in corporate excess, here’s a study with a decidedly different take.

A paper to be presented at the American Accounting Association annual meeting finds that the higher the gap is between CEO pay and that of the median worker, the better the company performance.

The researchers examined CEO pay ratios for 817 firms, whose CEOs had an average annual compensation of $7.8 million and whose workers’ mean pay was about $74,000.

They then measured firm value and operating performance based on one-year-ahead Tobin’s q and return on assets.

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