Do horizontal wage comparisons affect firm policies on executive pay? This paper explores that question using a 1992 SEC proxy disclosure rule that mandated increased disclosure of executive pay. We argue that this rule differentially increased wage comparisons within firms with...

Our study presents evidence that social comparison influences both the level of pay and the degree of performance sensitivity within firms. We report pay patterns among division managers of large, multi-business firms over a fourteen-year period. These patterns are consistent with employees...