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Australian chief executive officer remuneration: pay and performance

Author

Listed:
  • Rachel Merhebi
  • Kerry Pattenden
  • Peter L. Swan
  • Xianming Zhou

Abstract

International studies document strong evidence that chief executive officer (CEO) remuneration is positively correlated with corporate performance. Prior Australian studies, however, find no positive link between CEO pay and market performance. In the present paper we re-examine the association between Australian CEO remuneration and firm performance using standard empirical models from the international literature. We find that in every respect the Australian evidence is consistent with international findings for firms of the USA, UK and Canada. In particular, we document CEO pay-performance association as positive and statistically significant. Copyright (c) The Authors Journal compilation (c) 2006 AFAANZ.

Suggested Citation

  • Rachel Merhebi & Kerry Pattenden & Peter L. Swan & Xianming Zhou, 2006. "Australian chief executive officer remuneration: pay and performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(3), pages 481-497.
  • Handle: RePEc:bla:acctfi:v:46:y:2006:i:3:p:481-497
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    Citations

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    Cited by:

    1. Pascal Nguyen & Nahid Rahman, 2015. "Which governance characteristics affect the incidence of divestitures in Australia?," Australian Journal of Management, Australian School of Business, vol. 40(2), pages 351-374, May.
    2. Nguyen, Pascal & Rahman, Nahid & Zhao, Ruoyun, 2013. "Ownership structure and divestiture decisions: Evidence from Australian firms," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 170-181.
    3. Jean-Christophe Duhamel & Réda Sefsaf, 2017. "Valeur de la gouvernance d'entreprise et gouvernance des valeurs de l'entreprise. Recherche sur les effets des codes de gouvernance et les stratégies de communication en matière de gouvernance," Working Papers halshs-01633982, HAL.
    4. Julie Walker, 2010. "The Use of Performance-based Remuneration: High versus Low-growth Firms," Australian Accounting Review, CPA Australia, vol. 20(3), pages 256-264, September.
    5. Kuo, Hsien-Chang & Lin, Dan & Lien, Donald & Wang, Lie-Huey & Yeh, Li-Jen, 2014. "Is there an inverse U-shaped relationship between pay and performance?," The North American Journal of Economics and Finance, Elsevier, vol. 28(C), pages 347-357.
    6. Emma Schultz & Gloria Y. Tian & Garry Twite, 2013. "Corporate Governance and the CEO Pay–Performance Link: Australian Evidence," International Review of Finance, International Review of Finance Ltd., vol. 13(4), pages 447-472, December.
    7. Hristos Doucouliagos & Janto Haman & Saeed Askary, 2007. "Directors' Remuneration and Performance in Australian Banking," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1363-1383, November.
    8. Lam, Kevin C.K. & McGuinness, Paul B. & Vieito, João Paulo, 2013. "CEO gender, executive compensation and firm performance in Chinese‐listed enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 1136-1159.
    9. repec:eee:ecmode:v:64:y:2017:i:c:p:211-220 is not listed on IDEAS
    10. He, Yan & Chiu, Yung-ho & Zhang, Bin, 2015. "The impact of corporate governance on state-owned and non-state-owned firms efficiency in China," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 252-277.
    11. Pascal Nguyen & Nahid Rahman & Alex Tong & Ruoyun Zhao, 2016. "Board size and firm value: evidence from Australia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(4), pages 851-873, December.
    12. Zoltan Matolcsy & Anna Wright, 2007. "Australian CEO Compensation: The Descriptive Evidence," Australian Accounting Review, CPA Australia, vol. 17(43), pages 47-59, November.
    13. repec:bla:abacus:v:52:y:2016:i:4:p:619-684 is not listed on IDEAS
    14. Michaela Rankin, 2010. "Structure and Level of Remuneration Across the Top Executive Team," Australian Accounting Review, CPA Australia, vol. 20(3), pages 241-255, September.
    15. repec:bla:abacus:v:52:y:2016:i:4:p:685-771 is not listed on IDEAS
    16. Richard Heaney & Vineet Tawani & John Goodwin, 2010. "Australian CEO Remuneration," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 109-127, June.
    17. Cao, Jerry & Pan, Xiaofei & Tian, Gary, 2011. "Disproportional ownership structure and pay-performance relationship: Evidence from China's listed firms," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 541-554, June.

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