Using Panel Data to Estimate the Economic Determinants of CEO Compensation
The present study uses the latest data available from ExecuComp in order to estimate an economic model of the determinants of CEO compensation. Examining 975 CEOâ€™s over the period 1992-2002, the present study finds that experience had a positive effect on CEO pay, while industry specific dummy variables had little, if any, effect on compensation. Performance measures, such as net income per sales and return on equity, had very little effect on CEO pay. The results of the present study corroborate many anecdotal assertions that CEO pay is not linked to firm performance. However, the results of the present study indicate that experience is one of the most important factors affecting CEO compensation. Gender was not found to play a significant role; however, this result may be due to the fact that less than 2% of the CEOs in the sample used in the present study were women. These results suggest that years of experience may actually play more of role in the determination of CEO pay than how well the CEO manages the firm.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jensen, Michael C & Murphy, Kevin J, 1990.
"Performance Pay and Top-Management Incentives,"
Journal of Political Economy,
University of Chicago Press, vol. 98(2), pages 225-264, April.
- Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers 88-04, Rochester, Business - Managerial Economics Research Center.
- Nikos Vafeas, 2003. "Further Evidence on Compensation Committee Composition as a Determinant of CEO Compensation," Financial Management, Financial Management Association, vol. 32(2), Summer. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ags:reapec:50158. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.