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March 11, 2015 The Downside of Raising CEO Pay in Emerging Economies In a transitional economy, the greater the pay disparity between a company's top leaders and its workforce, the worse the firm's productivity, on average, apparently because of the corrosive effects of employee resentment, says a team led by Michael Firth of Lingnan University in Hong Kong. The team's study was conducted in China, where the ratio of top-management pay to workers' average pay rose from 4.92 in 2001 to 5.73 in 2012 as the country has moved cautiously toward a free-market system. SOURCE: Relative pay and its effects on firm efficiency in a transitional economy

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