New publication in the Journal of Business Finance & Accounting!

Prof. Dr. Peter Schäfer has published a new study in the renowned Journal of Business Finance & Accounting together with Dr. Anamarija Delic (TUM School of Management). Congratulations on this successful publication!

What is it about?
The study examines how investors will react if companies have to disclose how much more their board members earn compared to the average workforce - the so-called CEO pay ratio. The rule was introduced in the USA to ensure greater transparency in remuneration structures.

The research team analyzed how stock market prices changed on certain days when the introduction of this rule became apparent. The result: the majority of the markets reacted negatively - especially for companies where particularly large salary differences between management and employees were expected. Interestingly, the reaction was less negative when CEO remuneration was considered to be less performance-related - i.e. potentially in need of improvement.

What does this mean in practice?
The study shows: Investors see mandatory salary transparency as more than just neutral information - they fear potential disadvantages for companies with very high pay differentials, for example due to public criticism or changes in consumer behavior. At the same time, they believe that such rules could help contribute to fairer and more performance-related remuneration.

For companies, this means that those with high income inequality must expect critical reactions. For politicians, it shows that transparency requirements on the capital market do have an effect - both positive and negative.

The link to the article (open access) can be found here.