CEO Pay, Shareholder Returns, and Accounting Profits

Guy, Frederick

doi:10.1080/13571510050197186

Cited by 7 publications

(7 citation statements)

References 19 publications

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“…RTS is the one‐year total return to shareholders, including the monthly reinvestment of dividends. Guy (2000) finds a strong positive relationship between CEO's pay and the change of the return to shareholders. Based on this information, one may presume that the higher the return to shareholders, the narrower the compensation gap will be between the CEO and the Vice‐Presidents of a company.…”

Section: Methodsmentioning

confidence: 99%

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Gender, Top Management Compensation Gap, and Company Performance: Tournament versus Behavioral Theory

Vieito

2011

Corporate Governance

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Manuscript Type: EmpiricalResearch Question/Issue: This study is among the first to investigate the impact of gender on the relationship between the compensation gap of the CEO and Vice-Presidents on company performance, testing if companies managed by a female CEO or a male CEO follow tournament or behavioral theory. Tournament theory suggests that a large compensation gap between CEO and company Vice-Presidents (VPs) leads to higher company performance; behavioral theory states that higher performance may be achieved with a small compensation gap between CEO and VPs. Additionally the study also investigates if companies managed by a female CEO perform better, or not, than those managed by a male CEO, and if the factors that explain the compensation gap between CEO and VPs in these two groups of companies are the same, or not. Data for the investigation emanated from the USA during the period 1992 to 2004. Research Findings/Insights: The results reflect something quite new in the area -on average, companies managed by a female CEO perform better, and have a smaller compensation gap between the CEO and VPs than companies managed by a male CEO. In companies managed by a female CEO, a smaller difference in the total compensation gap between CEO and Vice-Presidents leads, on average, to higher company performance, however, when the CEO is a male, a higher compensation gap is required to obtain higher company performance. The results provide empirical support that the behavioral theory is predominant in companies managed by a female whereas tournament theory is predominant in companies managed by a male. Theoretical/Academic Implications: The paper fills an important gap in the existing literature by providing econometric evidence that males and females CEOs have a different impact on the relationship between CEO and VPs compensation gap and company performance, and that it is not indifferent to choosing a male or a female CEO in terms of company performance. Practitioner/Policy Implications: This study offers an insight to practitioners and policy makers suggesting that gender influences the relationship between the CEO and Vice-Presidents compensation gap and company performance. Boards may be able to improve company performance if they limit the compensation gap between CEO and VPs when the CEO is a female and extend it, when it is a male.

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Section: Methodsmentioning

confidence: 99%

“…Finally, Guy (2000) reports a strong positive relationship between the salary of a CEO and the change of return to shareholders in 99 British companies. This information was based on data retrieved during the period 1972 to 1989.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Gender, Top Management Compensation Gap, and Company Performance: Tournament versus Behavioral Theory

Vieito

2011

Corporate Governance

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“…While most advanced economies established stable open markets in the 1970s, financialization in terms of private household debts and firms' access to non‐debt‐based finance surged at a later stage and varies considerably across countries. Moreover, a number of studies providing evidence that firm size only explains a significantly smaller part of the variance than what has been previously assumed (Guy, , ; cf. Skott & Guy, ).…”

Section: The Market‐based Explanationmentioning

confidence: 90%

The politics of top executive compensation in advanced democracies

Angeles

2018

Sociology Compass

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Since the 1980s, advanced democracies have experienced CEO pay scandals at an accelerating rate. However, this course varied across countries. Existing theories come short in explaining why some democracies experienced more frequently scandals involving overcompensation of the CEOs in core industries. Further, most studies are based on the US political and corporate system, which differ from European democracies. This is problematic as these are currently the only studies we rely on when it comes to public policy making. I develop an argument, based on a critical review, on why we need more political science studies on the different policies on CEO pay. This direction of research may more accurately tackle questions such as why some democracies meet obstacles for CEO pay reforms, more than others.

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“…This exploits lagged values as instruments for the potentially endogenous variables, thereby purging the contemporary association between pay and performance. As Guy (2000) demonstrates in the context of executive pay, it is possible to extract both short-run and long-run coefficients from panel data by focusing respectively on the within and between-firm variation. We focus simply on the within firm variation using the dynamic structure to get at the longer-term career settlingup.…”

Section: Estimationmentioning

confidence: 99%

Heads I win, tails you lose? A career analysis of executive pay and corporate performance

Gregory‐Smith

Main

2014

CAMECO

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The paper adopts a novel career perspective to examine theories of corporate control in the context of executive pay. Detailed career histories of boardroom executives in all FTSE350 companies between 1996 and 2008 are utilised. The paper highlights the failure of existing arrangements to adjust pay outcomes where career performance is poor. The leading theoretical reasons for this disconnect, namely managerial power and neo-institutionalism, are not consistent with the data. The paper identifies a settling-up process at work, whereby pay is adjusted in the light of both past pay and past performance. From a policy perspective, a case is made for adopting a cumulative or career-oriented approach to rewarding executive performance through the use of truly long term incentives in the form of 'Career Shares'.

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CEO Pay, Shareholder Returns, and Accounting Profits

Cited by 7 publications

References 19 publications

Gender, Top Management Compensation Gap, and Company Performance: Tournament versus Behavioral Theory

Gender, Top Management Compensation Gap, and Company Performance: Tournament versus Behavioral Theory

The politics of top executive compensation in advanced democracies

Heads I win, tails you lose? A career analysis of executive pay and corporate performance

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