Executive compensation, corporate governance and corporate performance: A simultaneous equation approach
Executive compensation, corporate governance and corporate performance: A simultaneous equation approach
This paper investigates the association between executive compensation and performance. It uniquely utilises a comprehensive set of corporate governance mechanisms within a three-stage least squares (3SLS) simultaneous equation framework. Results based on estimating a conventional single equation model indicate that the executive pay and performance sensitivity is relatively weak, whereas those based on estimating a 3SLS model generally suggest improved executive pay and performance sensitivity. Our findings highlight the need for future research to control for possible simultaneous interdependencies when estimating the executive pay and performance link. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, executive pay and performance proxies.
Executive compensation, Corporate performance, Corporate governance, Simultaneousequation, Generalised method of moments (GMM), Endogeneity
67-96
Ntim, Collins G.
1f344edc-8005-4e96-8972-d56c4dade46b
Lindop, Sarah
01326442-043b-4924-90dc-fc43332d778a
Osei, Kofi A.
c2f5f5a9-a531-4db1-a59a-7561dcf307e8
Thomas, Dennis A.
094e07cf-9d77-4d26-96f1-89e88be840c7
14 April 2015
Ntim, Collins G.
1f344edc-8005-4e96-8972-d56c4dade46b
Lindop, Sarah
01326442-043b-4924-90dc-fc43332d778a
Osei, Kofi A.
c2f5f5a9-a531-4db1-a59a-7561dcf307e8
Thomas, Dennis A.
094e07cf-9d77-4d26-96f1-89e88be840c7
Ntim, Collins G., Lindop, Sarah, Osei, Kofi A. and Thomas, Dennis A.
(2015)
Executive compensation, corporate governance and corporate performance: A simultaneous equation approach.
Managerial and Decision Economics, 36 (12), .
(doi:10.1002/mde.2653).
Abstract
This paper investigates the association between executive compensation and performance. It uniquely utilises a comprehensive set of corporate governance mechanisms within a three-stage least squares (3SLS) simultaneous equation framework. Results based on estimating a conventional single equation model indicate that the executive pay and performance sensitivity is relatively weak, whereas those based on estimating a 3SLS model generally suggest improved executive pay and performance sensitivity. Our findings highlight the need for future research to control for possible simultaneous interdependencies when estimating the executive pay and performance link. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, executive pay and performance proxies.
Text
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More information
Published date: 14 April 2015
Keywords:
Executive compensation, Corporate performance, Corporate governance, Simultaneousequation, Generalised method of moments (GMM), Endogeneity
Organisations:
Centre of Excellence for International Banking, Finance & Accounting, Accounting
Identifiers
Local EPrints ID: 357421
URI: http://eprints.soton.ac.uk/id/eprint/357421
ISSN: 0143-6570
PURE UUID: b445dc7c-925d-40f8-beae-bf1e4d7dc06a
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Date deposited: 26 Sep 2013 15:26
Last modified: 15 Mar 2024 02:27
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Contributors
Author:
Sarah Lindop
Author:
Kofi A. Osei
Author:
Dennis A. Thomas
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