The Joint Effects of Supervisor Pay Transparency and Vertical Pay Dispersion on Reporting Honesty
Year: 2020
Type: article
Abstract: ABSTRACT We experimentally investigate how supervisor pay transparency interacts with vertical pay dispersion to affect subordinates' reporting honesty in a budgeting setting. We find that the effect of supervisor pay transparency relative to pay secrecy becomes more negative as vertical pay dispersion becomes higher. Our findings suggest that while supervisor pay transparency complements an egalitarian pay structure by increasing reporting honesty, it does not fare along with high vertical pay dispersion as the combination of the two appears to decrease reporting honesty, even when such high dispersion can be justified. Further investigation suggests that our result is not driven by the feeling of unfairness toward high supervisor pay, but by a benchmarking effect (i.e., subordinates use supervisor pay as a pay standard and try to find ways to earn a similar amount).
DOI: 10.2308/jmar-18-080
Authors: Xiaotao Kelvin Liu, Yu Tian, Yue May Zhang
Institutions: Northeastern University, University of Central Florida
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3005260296