This file photo shows the buildings of South Korea’s major companies in Seoul. (Yonhap)
SEOUL, July 7 (Korea Bizwire) — Companies that have reduced wages for management staff following the coronavirus outbreak are also seeing relatively low price-to-earnings ratios (PER).
The Daishin Economic Research Institute conducted a study on the correlation between management wages at 343 companies listed on the stock exchange and PER, based on their 2020 business reports.
The study showed that companies that cut salaries, bonuses, and total wages have seen the company’s stock price rise by 3 percent (salary cuts), 0.8 percent (bonus cuts), or drop by 0.6 percent (cuts in total wages).
Companies without wage cuts saw share prices rise by 18.7 percent (without salary cuts), 21.8 percent (without bonus cuts), and 23.5 percent (without cuts in total wages).
The average PER of companies was 14.2 percent. Firms that reduced wages fell short of the said average.
“Changing stock prices following the coronavirus outbreak seem to have impacted the wages of management staff,” the institute argued.
“It reflects the intent of management staff to spread the word on the pandemic’s negative impact on stock prices with other parties of interest.”
Companies that raised dividends and those that did not each accounted for 35 percent of companies that cut wages for management staff. On the other hand, 55 percent of companies without wage cuts raised dividends. Only 20 percent cut dividends.
H. M. Kang (hmkang@koreabizwire.com)
