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Customer prospects and pay-performance sensitivity: Evidence from Korea

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  • Park, Sohee

Abstract

This paper examines how business prospects in customer firms affect executive pay-performance sensitivity in supplier firms. Using Korean Input-Output Accounts Data and Business Confidence Index published by the Bank of Korea, I find that customer prospects are positively associated with executive pay-performance sensitivity and the association is extended to the components of performance in a way that encourages managers to better exploit the market opportunities. The positive association is more pronounced when the inter-industry data are more informative, when the firm belongs to a more competitive industry, and when the corporate governance is stronger.

Suggested Citation

  • Park, Sohee, 2023. "Customer prospects and pay-performance sensitivity: Evidence from Korea," Research in International Business and Finance, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002458
    DOI: 10.1016/j.ribaf.2022.101859
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    More about this item

    Keywords

    Pay-performance sensitivity; Supply-chain relationship; Business confidence index; Executive compensation; Performance risk;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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