I investigate the real effects of Section 953(b) of the Dodd-Frank Act, which requires that firms disclose the ratio of total CEO compensation to the median employee compensation. Using a difference-in-differences framework and granular data at the establishment-level, I document that Section 953(b) leads to employment cuts. Employment cuts are particularly severe in firms that have high CEO pay, in states that have weak labor protection laws, and in establishments that are part of the firm’s noncentral operations. These employment cuts are accompanied by an increase in spending on information technology, suggesting that firms are changing their mixture of inputs rather than downscaling their operations.
CEO Pay Ratio; CSR; Disclosure Mandate; Dodd-Frank Act; Employment
Yeung, Eric; Forman, Chris; Campello, Murillo
Ph. D., Management
Doctor of Philosophy
Attribution-NonCommercial-NoDerivatives 4.0 International