Payoffs for layoffs? An examination of CEO relative pay and firm performance surrounding layoff announcements

In this study, we theorize that chief executive officers’ (CEOs’) peer pay comparisons influence their decisions to engage in layoffs, and we consider the conditions under which layoffs deliver “payoffs” in the form of increases in subsequent CEO relative pay. Our results indicate that CEOs receiving compensation below their peers are significantly more likely to announce layoffs in the subsequent year, relative to those receiving compensation...