Professor Daniel O’Connor and I were honored to faculty advisors for an honors project on the CEO Pay Ratio conducted by Alex Tursi, who graduated from Moravian College in 2020. He completed his work under severe circumstances, the COVID pandemic that afflicted the United States and the world in the Spring of 2020. At the time Alex did this work, the Pay Ratio disclosure had only been implemented for two years so this was cutting edge research. Alex received the honors distinction for his work.
The CEO Pay Ratio is a new required disclosure for most publicly traded
companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act beginning in 2017. The study sought to understand the effect of industry,
revenue, and market capitalization on the pay ratio. I collected the CEO Pay
Ratios, revenue, and market capitalization for the 65 companies composing the
Dow Jones Industrial, Dow Jones Transportation, and Dow Jones Utilities indices
from the SEC EDGAR database for 2017 and 2018 and applied regression
analysis to the data. Industry was found to be the most important factor in
determining the ratio.