SEC Lacks Economic Justification for Proposed Pay Ratio Disclosure Rule

by Korok Ray, Visiting Scholar

December 03, 2013

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The comment period closed yesterday on the Securities and Exchange Commission’s (SEC) proposed rule requiring disclosure of the ratio of CEO pay to the median pay of all workers in the firm. In a public interest comment filed with the SEC, I argue there is little economic justification for this disclosure, which appears to be motivated by a desire to “shame” companies with high wage inequality inside the firm.

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