Does leverage influence the impact of pay gaps on performance in listed retail and mining firms? Evidence from South Africa
Nomanyano Primrose Mnyaka-Rulwa and
Joseph Olorunfemi Akande
Journal of Accounting in Emerging Economies, 2024, vol. 15, issue 1, 242-270
Abstract:
Purpose - Agency theory motivated this study, posing that leverage mitigates the agency problem. The aim was to examine whether leverage influences the relationship between executive-employee pay gaps (EEPGs) and firm performance. The study was conducted in the mining and retail sectors between 2012 and 2021. Design/methodology/approach - Two EEPGs were featured based on their executive fixed pay and variable incentives accumulation. Proxies of firm performance were headline earnings per share; return on assets; earnings before interest, tax, depreciation and amortisation; and return on stock price. Data were collected from 76 JSE-listed firms in the retail and mining sectors and analysed using the two-step generalised method of moments. Findings - The results revealed the hybrid implication of the pay gap for firm performance in the retail and mining sectors of South Africa, depending on the performance measures emphasised. More importantly, the study shows that with the moderating effects of leverage, firms can improve their performance while shrinking the pay gap. Practical implications - The results have implications for policy addressing income inequality, debt management, executive compensation and regulatory reforms in South Africa concerning productivity and remuneration decisions. Originality/value - The article provides specific literature for retail and mining industries on pay gaps, shows that it is possible to reduce the pay gap without compromising performance and suggests a new measure of performance that is more attuned to pay gap effect measurement.
Keywords: Pay gap; Executive pay; Firm; Performance (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (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:jaeepp:jaee-02-2023-0040
DOI: 10.1108/JAEE-02-2023-0040
Access Statistics for this article
Journal of Accounting in Emerging Economies is currently edited by Dr Shahzad Uddin
More articles in Journal of Accounting in Emerging Economies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().