Corporate Income Inequality and Corporate Performance: Any Correlations?

Morais, Filipe; Kakabadse, Andrew; Kakabadse, Nada K.; Pryce, Adrian

doi:10.1057/9781137275707_3

Cited by 3 publications

(20 citation statements)

References 29 publications

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“…One may argue that if at the macro-economic level increased income inequality as measured by the Gini Index hurts economic growth and social well-being, the same could happen at the corporate level where growing CGI would hurt shareholder value, employee morale, turnover and other performance indicators (Pryce et al, 2011;Morais et al, 2013).…”

Section: The Macroeconomic Measurement Of Inequality: the Gini Indexmentioning

confidence: 99%

“…Should companies regard the CGI as a measure to disclose in proxy statements, we could consider other soft performance indicators such as number of hours lost for sick leave (proxy for health effects at the macroeconomic level), number of disciplinary and grievance events, labour disputes, strikes (proxy for social unrest, crime, violence), unionisation of employees, employee participation, engagement and satisfaction (proxies for social capital and quality of community life). (Morais et al, 2013).…”

Section: Advantages and Disadvantages Of Using The Cgi For Regulatorsmentioning

confidence: 99%

“…Criticism from the corporate sector has permeated the debate raising doubts of whether multiples of pay are useful, implementable and add value (PWC, 2010;Harsen et al, 2010;Hay Group, 2011). Some observe (CEC, 2011;Morais et al, 2013) that there is an over-reliance from the Security Exchange Commission (SEC) and other regulators on the measure of CEO to median employee pay ratios. They argue that there are better alternatives available, such as the Corporate Gini Index (CGI).…”

Section: Introductionmentioning

confidence: 99%

“…Building on Morais et al's (2013) study on developing the CGI as a more complete and accurate measure of corporate income inequality to discuss its determinants, we first start with a background discussion of key trends on executive compensation, wealth distribution, income inequality and pay multiples.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The Corporate Gini Index (CGI) determinants and advantages: Lessons from a multinational retail company case study

Morais¹,

Kakabadse²

2014

Int J Discl Gov

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This article identifies and compares the determinants of CEO compensation to median employee earnings with those of the Corporate Gini Index (CGI). Using a multinational retail company, the article posits that the CGI is an advantageous corporate alternative pay inequality measure that concerns CEO pay multiples to median employee earnings, which regulators should consider using and disclosing in proxy statements. Although CGI and the official measure of multiples of CEO pay to median employee earnings share some of the challenges, the advantages of CGI as an alternative measure are greater. Our findings suggest that the CGI is a much better measure of corporate income inequality bringing clear benefits at both micro and macro levels of intervention.

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Section: The Macroeconomic Measurement Of Inequality: the Gini Indexmentioning

confidence: 99%

Section: Advantages and Disadvantages Of Using The Cgi For Regulatorsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Corporate Gini Index (CGI) determinants and advantages: Lessons from a multinational retail company case study

Morais¹,

Kakabadse²

2014

Int J Discl Gov

Self Cite

View full text Add to dashboard Cite

show abstract

“…Since entities are responsible for income generated by households, within-company income inequality overflow into societies (Enderle, 2018). The overflow of income inequality has widely increased in contemporary business world due to dominant share and performance-based pay offered to executives (Morais et al, 2013;Willman & Pepper, 2019). There is strong evidence exhibiting the correlation expanding the sample to include a broader range of listed entities to obtain a more comprehensive understanding of these relationships across the entire corporate landscape.…”

Section: Introductionmentioning

confidence: 99%

The Nexus between Executive Compensation and Firm Performance: Does Governance and Inequality Matter?

Muzata,

Marozva

2023

Glob Bus Financ Rev

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Purpose: The main aim of this study is to empirically investigate the relationship between executive compensation, inequality, and corporate governance, thus filling a gap in extant literature. Design/methodology/approach: The methodology used calculated the salary Gini (s-Gini) and governance indices (G-index) for companies in the sample and these were used as proxies for inequality and corporate governance respectively. The dataset is panel in nature. It comprises 46 conveniently selected largest JSE listed companies (by market capitalisation). A 2-step system GMM was used to determine if s-Gini and G-index were channels through which executive compensation could influence company performance. While considering a dynamic specifi-cation, the GMM estimator addressed possible endogeneity bias. GMM estimation method addressed potential over or underestimation of the relationship between company performance and executive compensation because it was considered more efficient on shorter panels. GMM analysis on companies listed on the JSE Top40 index was from 2008 to 2020. Overall, the methodology and analysis employed provide valuable insights into the complexities between executive compensation, inequality, corporate governance, and company performance, shedding light on important factors that can influence company's performance. Findings: Results indicated that as executive compensation improved, company performance deteriorated. Furthermore, varied impact of inequality on performance measures were recorded. The observation was that inequality influenced performance in diverse ways. This accentuated the convoluted nature of this relationship. The study also established that both inequality and corporate governance are channels through which executive remuneration affects performance. Additionally, a positive nexus between governance and net profit margin was discovered. Research limitations/implications: The results imply that: higher executive pay does not always yield better com-pany performance; the effects of executive pay on performance are mediated by the level of inequality within the company and the quality of corporate governance practices; good corporate governance practices can enhance financial performance. It is recommended that companies should prioritise espousal of sound corporate governance practices because they have positive influence on performance. Moreover, diligent attention must be given to how executive compensation is configured. Poorly designed compensation packages erode company value. Conversely, properly structured ones may enhance performance and successively improve company value. This study is focused solely on the Top40 largest listed companies in South Africa. The findings may not be generalisable to all listed entities, as there could be variations in the relationship between executive compensation, inequality, and corporate governance across companies of different sizes. By concentrating on the largest entities, the study may gloss over nuances that exist in smaller companies. However, it is important to state that the insights gained from this research are still valuable and can provide useful guidance to policymakers, shareholders, and other stakeholders in under-standing the interaction of the variables examined within the context of larger firms. Future research should consider expanding the sample to include a broader range of listed entities to obtain a more comprehensive understanding of these relationships across the entire corporate landscape. Originality/value: This study contributes to research gap highlighted by Core et al.

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University transformation and governance: An evaluation of King IV-fit

Muzata

2023

CGOBR

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The notion of transformation and governance in universities inspired this study. The study’s aims were to evaluate the extent to which King IV serves the transformation agenda of universities and provide recommendations for future King Code instalments given transformation imperatives in South Africa. Considering specific university contexts, literature provides a suite of governance models. The country’s need to achieve transformation targets brings complexities to the purest forms of governance models. A literature search strategy and simplified meta-synthesis approach were applied to transformation and governance literature. Types of transformation (Colloff et al., 2017) and seven university governance models (Baldridge, 1971; Meyer, 2007; Trakman, 2008) were reviewed. Achieving a mix of positives from various codes was found to be possible, and an enabling transformed governance mechanism was proposed, King IV’s application has transformation limitations making it less suitable as universities’ governance framework designed to attain transformation objectives. The study recommends that future instalments of the King Code need to extensively address aspects of socio-economic transformation in similar magnitudes as the current instalment does principles and practices. Additionally, universities should not be tied to one code’s provisions, universities examine and implement governance systems grounded in African cultures, and future research should be conducted around indigenous governance knowledge and systems which should shape governance models for universities.

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Corporate Income Inequality and Corporate Performance: Any Correlations?

Cited by 3 publications

References 29 publications

The Corporate Gini Index (CGI) determinants and advantages: Lessons from a multinational retail company case study

The Corporate Gini Index (CGI) determinants and advantages: Lessons from a multinational retail company case study

The Nexus between Executive Compensation and Firm Performance: Does Governance and Inequality Matter?

University transformation and governance: An evaluation of King IV-fit

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