Social capital and executives’ pay dispersion: evidence from US public firms

Yachen Cui and Takeshi Nishikawa

International Journal of Managerial Finance, 2026, vol. 22, issue 3, 630-658

Abstract: PurposeThis study investigates whether community social capital influences executive pay dispersion and how the resulting dispersion affects firm performance.Design/methodology/approachUsing panel data from 3,055 US public firms across 458 counties from 1995 to 2016, we employ regression analyses to assess the influence of community social capital on two forms of top management team pay dispersion: hierarchical (CEO-to-other executives) and horizontal (among non-CEO executives). Furthermore, we use a structural equation model to examine how the pay dispersion shaped by community social capital affects firm performance.FindingsWe find that higher community social capital is significantly associated with lower horizontal pay dispersion among non-CEO executives, while hierarchical pay dispersion remains unaffected. Mediation analyses show that reduced horizontal pay dispersion serves as a mechanism through which community social capital improves firm performance.Research limitations/implicationsThese findings highlight the role of cooperative norms in shaping compensation practices, mitigating opportunistic behaviors, and promoting equitable pay structures that enhance organizational outcomes.Originality/valueThis study provides empirical evidence to the emerging literature that examines how community social capital, an important contextual constraint, shapes executive pay practices and channels its effects into better firm performance.

Keywords: Social capital; Cooperative norm; Non-CEO executives’ pay dispersion; Pay inequality; CEO pay gap (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/ijmf/article/22/3/630/1366 ... tives-pay-dispersion (text/html)
https://www.emerald.com/ijmf/article-pdf/22/3/630/ ... f-08-2025-0437en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmfpp:ijmf-08-2025-0437

DOI: 10.1108/IJMF-08-2025-0437

Access Statistics for this article

International Journal of Managerial Finance is currently edited by Dr Alfred Yawson

More articles in International Journal of Managerial Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().