Executive pay dispersion, corporate governance, and firm performance

Lee, Kin Wai; Lev, Baruch; Yeo, Gillian Hian Heng

doi:10.1007/s11156-007-0053-8

Cited by 154 publications

(148 citation statements)

References 61 publications

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“…On the other hand, several studies find evidence in support of the tournament theory. For example, Lee et al (2008) and Kale et al (2009) conclude that a positive relation exists between CEO tournaments and firm performance for U.S. firms. 26 We test whether the tournament structure is related to performance in our international sample by regressing a measure of firm value (Tobin's q) on our measures of the structure.…”

Section: Ceo Tournaments and Firm Valuementioning

confidence: 99%

CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences, and Consequences

Burns¹,

Minnick

Starks

2017

J. Financ. Quant. Anal.

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Using a cross-country sample, we examine the chief executive officer (CEO) tournament structure (measured alternatively as the ratio and the difference of pay between the CEO and other top executives within a firm). We find the tournament structure to vary systematically with firm and country cultural characteristics. In particular, firm size and the cultural values of power distance, fair income differences, and competition are significantly associated with variations in tournament structures. We also establish support for the primary implication of tournament theory in that tournament structure tends to be positively related to firm value, even after controlling for endogeneity.

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Section: Ceo Tournaments and Firm Valuementioning

confidence: 99%

CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences, and Consequences

Burns¹,

Minnick

Starks

2017

J. Financ. Quant. Anal.

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“…It has been comprehensively explained in the literature that CEO compensation has a significant impact on the firm performance. A thorough review of the current literature reveals conflicting results regarding this relationship (Adjaoud et al, 2007;Bauer et al, 2009;Deutsch, 2007;Herrmann et al, 2010;Junarsin, 2011;Kubo & Saito 2008;Lee et al, 2008;Makri et al, 2006;Pissaris et al, 2010;Schiehll & Bellavance, 2009;& Yawson, 2006) found a positive relationship between CEO compensation and firm performance in the developed countries. In the developing countries, many researchers also found a positive association between CEO compensation and firm performance (Al Farooque et al, 2007;.…”

Section: The Ceo Compensation and Firm Performancementioning

confidence: 99%

The Effect of Board of Directors Characteristics, Audit Committee Characteristics and Executive Committee Characteristics on Firm Performance in Oman: An Empirical Study

Al-Matar¹,

Al‐Swidi²,

Fadzil³

2014

ASS

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This study is an attempt to achieve the main objective by examining the association between the board of director's characteristics, audit committee characteristics and the executive committee characteristics and the performance of the Oman companies. This study used many assumptions to test the relationship between independent variables and dependent variable as discussed in the section explaining the study method. The data comprised of 162 non-financial companies because financial and non-financial companies employ different methods and they have different structures. As this study attempts to bridge the gap in the existing literature by investigating the association between corporate governance mechanisms and firm performance in the emerging market of Oman, it focuses on adding new important variables of corporate governance mechanisms like board change, the role of secretary on the board, the legal counsel and the executive committee characteristics that improve firm performance.The findings indicated a significantly positive relationship between board size, board meeting, audit committee independence and executive committee independence, and the Tobin`s Q. On the other hand, board independence and legal counsel are significantly and negatively related to Tobin`s Q. Moreover, a positive but insignificant relationship is found between CEO tenure, CEO compensation, audit committee size, and the firm performance (Tobin`s Q). Furthermore, board change, the role of the secretary on the board, audit committee meeting, executive committee size and executive committee meeting are revealed to have a negative but insignificant association with firm performance (Tobin`s Q). Finally, this study provides recommendations for future research.

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“…Industry effects may be significant due to regulation and monopoly, although firms in high-technology industries usually set a higher pay dispersion to attract and retain their managers (Lee et al, 2008). To examine this we divide the total sample into high-technology and non-high-technology industries.…”

Section: Other Components Of Ceo Compensationmentioning

confidence: 99%

Does CEO pay dispersion matter in an emerging market? Evidence from China's listed firms

Pan

Tian

2013

Pacific-Basin Finance Journal

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This paper examines how the institutional features of emerging economies (i.e., government ownership, political connections, and market reform) influence CEO pay-dispersion incentives. Consistent with our expectation, we find that CEO pay dispersion generally provides a tournament incentive in China's emerging market, as it is positively associated with firm performance. In addition, tournament incentives are weaker where firms are controlled by the government and where the CEO is politically connected, but it became stronger after the China's split-share structure reforms. Further, we find that in state controlled firms the satisfaction gained by meeting multiple economic and social goals largely reduces the effectiveness of tournament incentives, while the managerial agency problems inherent in private firms might mitigate them. controlled by the government and where the CEO is politically connected, but it became stronger after the China's split-share structure reforms. Further, we find that in state controlled firms the satisfaction gained by meeting multiple economic and social goals largely reduces the effectiveness of tournament incentives, while the managerial agency problems inherent in private firms might mitigate them. JEL Classifications: G32; G34

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Executive pay dispersion, corporate governance, and firm performance

Abstract: Compensation, Corporate governance, Performance, Pay dispersion, G30, G34, J33, L22,

Cited by 154 publications

References 61 publications

CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences, and Consequences

CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences, and Consequences

The Effect of Board of Directors Characteristics, Audit Committee Characteristics and Executive Committee Characteristics on Firm Performance in Oman: An Empirical Study

Does CEO pay dispersion matter in an emerging market? Evidence from China's listed firms

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