Document Type
Article
Publication Date
2025
DOI
10.1111/jfir.70008
Publication Title
Journal of Financial Research
Pages
39 pp.
Abstract
We examine whether and how the magnitude of the CEO pay ratio affects dividend policy in the context of inequality-averse investors. Our results demonstrate a positive association between the two and remain robust to endogeneity concerns. We find that the CEO pay ratios positively affect dividends irrespective of whether CEO compensation contracts motivate risk-averse or risk-taking policy choices. This non-diverse effect on dividend policy across CEOs with different pay structures contradicts previous studies and highlights the wealth effect resulting from the SEC mandate. Further analyses reveal a negative effect of the pay ratio on cash holdings and investment inefficiency.
Rights
© 2025 The Authors.
This is an open access article under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Original Publication Citation
Chowdhury, R., & Doukas, J. A. (2025). CEO‐employee pay ratio disclosure and dividend policy. Journal of Financial Research. Advance online publication. https://doi.org/10.1111/jfir.70008
Repository Citation
Chowdhury, Rajib and Doukas, John A., "CEO-Employee Pay Ratio Disclosure and Dividend Policy" (2025). Finance Faculty Publications. 56.
https://digitalcommons.odu.edu/finance_facpubs/56
Supporting Information