CEO-Employees Pay Ratio, Employees’ Productivity and Firm Performance: Evidence from UK : WestminsterResearch

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Title	CEO-Employees Pay Ratio, Employees’ Productivity and Firm Performance: Evidence from UK
Type	Journal article
Authors	Hussien, M., Mathew, S. and Phiri, O.
Abstract	This paper investigates the impact of the difference in pay between a CEO and regular employees on the productivity of employees and the overall performance of a company. A selection of companies listed on the FTSE All-Share Index from 2009 to 2019 was examined. The findings indicate a significant positive correlation between the pay ratio of CEO to employees and both employee productivity and firm performance. However, when the sample was divided into high and low CEO pay gap companies, the positive effect was less noticeable in the high pay ratio group than in the low pay ratio group. The study supports the tournament theory, which argues that employees compete for promotions to increase their pay. The research contributes to the ongoing debate and discussion about disclosing CEO-employee pay ratios, as it demonstrates how pay disparities can impact employee productivity and firm performance. The results are relevant to policymakers, practitioners, and other stakeholders who need to make informed decisions about levels of CEO and employee pay.
Keywords	Pay Inequality
	CEO-Employees pay ratio
	Tournament
	Social comparison
	Productivity
Journal	Corporate Governance: The international journal of business in society
ISSN	1472-0701
Year	2025
Publisher	Emerald Publishing Limited
Accepted author manuscript	CEO-Employees Pay Ratio Evidence from UK - A.pdf License CC BY-NC 4.0 File Access Level Open (open metadata and files)
Digital Object Identifier (DOI)	https://doi.org/10.1108/CG-07-2024-0374
Web address (URL)	https://www.emerald.com/insight/content/doi/10.1108/cg-07-2024-0374/full/html?utm_source=smc_email_onboarding&utm_medium=email&utm_campaign=apa_author_journals_access_2025-4-7
Published online	07 Apr 2025

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CEO-Employees Pay Ratio, Employees’ Productivity and Firm Performance: Evidence from UK

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