Please use this identifier to cite or link to this item:
http://hdl.handle.net/11375/30019
Title: | Owner culture and pay inequality within firms |
Authors: | Bena, Jan Lu, Guangli Wang, Iris Michael Lee-Chin & Family Institute for Strategic Business Studies |
Keywords: | Inequality;Individualism;Immigrant-owned firms |
Publication Date: | Jun-2024 |
Series/Report no.: | Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper; |
Abstract: | Using a comprehensive dataset of employee-employer-firm owner immigration records in 2001-2017, we examine the impact of immigrant owners’ national culture on within-firm pay inequality. Firms owned by immigrants from more individualistic countries exhibit higher pay dispersion among employees. This result is robust across various empirical methods, including difference-in-differences analysis of ownership changes. Owners’ individualism is associated with their employee compensation structures: more frequent and larger performance pay components—especially for highly educated employees, quicker promotions to high-paying positions, and less pay compression. These findings highlight the role of culture in shaping pay practices and elucidate broader determinants of income inequality. Valuation Insight: Firms owned by immigrants from more individualistic countries exhibit a higher degree of pay dispersion among their employees. The reasons are a greater emphasis on pay tied to performance and faster promotion of high-performing employees. To the extent that firm value is materially associated with these employee management policies the results suggest a key role of owner cultural background in determining firm value. |
Description: | 78 p. ; Includes bibliographical references (pp. 31-34); Internet Appendix to Owner Culture and Pay Inequality within Firms (For Online Publication Only) IA1-IA31 (pp. 47-78) |
URI: | http://hdl.handle.net/11375/30019 |
Appears in Collections: | Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper Series |
Files in This Item:
File | Description | Size | Format | |
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sbv_wp_2024-03.pdf | 2.02 MB | Adobe PDF | View/Open |
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