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To what extent does the compensation of CEOs of Dutch listed firms depend on firm performance?

Spoor, T.I.J. (2020) To what extent does the compensation of CEOs of Dutch listed firms depend on firm performance?

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Abstract:The relationship between Chief Executive Officer (CEO) compensation and firm performance has been studied by multiple researchers worldwide and is also a hot topic in society. This study examined the widespread belief that firm performance positively affects variable CEO compensation. The sample used in this study consisted of Dutch listed firms over the period 2016-2018. The results show that to state whether or not firm performance positively affects CEO variable compensation it highly depends on whether the effect of firm performance is studied on short-term or long-term variable compensation, how firm performance is measured, how compensation is measured, if contemporaneous or lagged performance variables are included and if sub-samples based on industry classifications are used. Overall, there is a statistically significant and robust positive effect of accounting-based firm performance on short-term incentive compensation for firms located in the other services sector. However, there is no unambiguous statistically significant and robust positive effect of market-based firm performance on long-term incentive compensation. Moreover, results show that firm size, the presence of a compensation committee and concentrated owners are related with CEO variable compensation.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/81064
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