Top executives’ pay for long-run performance and corporate governance

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the possibility that the quality of corporate governance has effects on the dynamic relationship between CEO compensation and firm performance. Building on the dynamic view of CEO pay and firm performance and corporate governance literature, we find that firms with weak corporate governance are more likely to provide high powered long-run incentives to CEOs, indicating CEO incentive contracts can be replaced by the role of external corporate control when the external control mechanism is not functioning effectively from the optimal contracting view. Overall, the findings imply that firm’s governance mechanism can generate cross-sectional variations in CEO long-term incentive contracts.

Original languageEnglish
Pages (from-to)661-670
Number of pages10
JournalJournal of Applied Business Research
Volume32
Issue number2
DOIs
StatePublished - 1 Mar 2016

Keywords

  • Blockholders
  • CEO compensation
  • Dynamic agency view
  • Long-term performance

Fingerprint

Dive into the research topics of 'Top executives’ pay for long-run performance and corporate governance'. Together they form a unique fingerprint.

Cite this