Equity ownership gives labor both a fractional stake in the firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly,...

Equity ownership gives labor both a fractional stake in a firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly,...

We study the determinants and effects of the relative compensation of top executives and lower-level employees. First, we show that CEO–employee pay ratios depend on the balance of power between the CEO (relative to the board) and ordinary employees (relative to management). Second, our...