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Corporate social responsibility and the executive-employee pay disparity

Ranjan D'Mello, Sungjoung Kwon and Francesca Toscano

Journal of Banking & Finance, 2024, vol. 162, issue C

Abstract: We examine the impact of employee-related Corporate Social Responsibility (ER-CSR) on pay disparity between top management and the average worker. Firms with higher ER-CSR ratings have a lower pay disparity and the effect is greatest when executives are paid the most. ER-CSR is associated with a lower ratio of top management's cash and long-term incentive compensation, relative to the average employee's pay. We find that the negative relation is driven by socially responsible firms paying their average employees more. Finally, we document that CSR activities related to employee relations and diversity are those leading to a significant pay disparity reduction.

Keywords: Corporate social responsibility; Executive–employee pay disparity; Income Inequality (search for similar items in EconPapers)
JEL-codes: G41 M14 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:162:y:2024:i:c:s0378426624000748

DOI: 10.1016/j.jbankfin.2024.107154

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