Cancelled!

Strategy & Business Policy

Speaker: Claudine Gartenberg

Professor - Wharton

Conference  Jouy-en-Josas / room meeting T027

Abstract:

The rise of active owners—hedge funds and private equity firms—has raised questions about the influence of corporate owners on employee compensation. Prior research documents that active owners reduce overall compensation through workforce restructuring and slower wage growth. What remains unexplored is whether active owners also pay less for comparable work: whether they compensate the same jobs differently that other owners. Using detailed compensation from approximately 20 million employee records across 896 U.S. firms, we compare pay within narrowly defined labor markets that hold constant year, region, occupation, and skill level. We find that firms with active owners pay 2 to 4% less for comparable work than other firms. These differentials manifest both as lower base salary and flatter incentive pay, and appear to reflect, at least in part, an owner treatment effect. Notably, the effects are concentrated in more monitorable contexts: routine jobs, jobs with quantifiable outputs, and those in less knowledge-intensive industries. These patterns are consistent with active owners substituting compensation-based incentives with managerial oversight. Altogether, this study shows that corporate ownership has direct consequences for employees: who owns the firm shapes not just what work is done, but how that work is monitored and compensated.