CEO compensation structure and firm performance

Blackwell Publishing Ltd
Publication Type:
Journal Article
Accounting & Finance, 2011, 51 (3), pp. 745 - 763
Issue Date:
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The objectives of our study are to estimate a model of `efficient compensation structure based on firm characteristics and test the performance consequences of deviation from the efficient compensation structure. Our results are based on 3503 firm years for the period from 1999 to 2005. The results suggest that firms whose CEOs receive compensation inconsistent with their firm characteristics have a lower performance compared to those firms whose CEOs compensation is consistent with their firms characteristics. Our measure of performance is based on both accounting and market-based performance measures. Overall, our study provides some important new insights into the links between CEO compensation structure and firm performanc
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