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Salary gap between executives and employees : The case of Korea's fifty largest firms

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Frame of Image s to discover if there are bubbles in the executive compensations of Korea s sales-based 50 largest firms when their managerial abilities and firm size effects are taken into consideration. The paper further seeks to demonstrate if there are significant compensation gaps between the executives and their employees. Unfortunately, there is no previous research d i r e c t l y tackling wage bubbles. Most previous researches in the related fields are focused on compensation determinants (Oconell, 2005 McNight 2000; Hall and Liebman, 1998; Ingraham and Thomson, 1995) as well as the impact of executive compensation on firm performance (Kato & Kubo, 2006; Fish & Shivdasani, 2005; Hanon & Rajgopal, 2003; Misra & McConaughy, 2000; Tushman and Rosenkopf, 1996). However, it is strongly desirable to produce reliable outcomes to
verify if the anti-conglomerate movement originating from the conflict between the above-mentioned two interested parties is socially acceptable. This paper is the first step directly attempting to analyze the bubbles in executive compensations of Korea s large enterprises. We name the bubble itself in executive compensation as an absolute salary bubble (ASB) and refer the bubble in relative executive compensation against employees as a relative salary bubble (RSB). Using them, we can perform firm-to-firm evaluation by the combinations of the absolute and relative bubbles. The underlying assumption is that positive RSBs are bad signals to job seekers while they de


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Title Salary gap between executives and employees
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Sub Title

The case of Korea's fifty largest firms

Material Type Reports
Author(English)

Yim, Hyung Rok; Oh, Jeungil

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2006
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 11(no. 4)
Pages 7
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < Entrepreneurship
Social Development < Employment
Holding KIET; KDI School

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