The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 10 Sep 2026 11:32:17 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.10 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Private Equity and Pay Gaps Inside the Firm – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Private Equity and Pay Gaps Inside the Firm https://corpgov.law.harvard.edu/2026/09/10/private-equity-and-pay-gaps-inside-the-firm/?utm_source=rss&utm_medium=rss&utm_campaign=private-equity-and-pay-gaps-inside-the-firm https://corpgov.law.harvard.edu/2026/09/10/private-equity-and-pay-gaps-inside-the-firm/#respond Thu, 10 Sep 2026 11:31:18 +0000 https://corpgov.law.harvard.edu/?p=183783?d=20260909142715EDT Posted by Lily Fang (INSEAD), Jim Goldman (McGill University) and Alexandra Roulet (INSEAD and CEPR), on Thursday, September 10, 2026
Editor's Note:

Lily Fang is a Professor at INSEAD, Jim Goldman is an Associate Professor at McGill University, and Alexandra Roulet is an Associate Professor at INSEAD and a CEPR Research Fellow. This post is based on their recent article, forthcoming in the Journal of Finance.

Private equity has become an increasingly important form of corporate ownership around the world, yet it remains controversial. Labor concerns, in particular, are often at the forefront of the policy and public discussions about their investments. In our paper, lead article in the August 2026 issue of the Journal of Finance, we ask a question that this debate has largely left aside: what happens to the distribution of pay inside a company after it is bought out?

Theory offers competing answers. Post-buyout investment in technology may complement high-skilled workers while substituting for low-skilled ones, widening pay gaps. Alternatively, in the pursuit of efficiency, target firms may part with expensive employees and replace them with cheaper hires, compressing the pay distribution. Which force dominates is an empirical matter.

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