University of Twente Student Theses


The Impact of CEO Compensation on Firm Risk: Evidence from Indian Firms

Wilmink, Ruud (2021) The Impact of CEO Compensation on Firm Risk: Evidence from Indian Firms.

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Abstract:The pay-risk relationship has received a lot of attention in the past decades. In fact, many scholars have researched the relationship between several components of CEO compensation and firm risk. However, these results may not apply to an emerging market context, because emerging markets differ in many aspects from developed markets. In addition, a lot of existing research into the pay-risk relationship has focused solely on the financial services industry, while the effect might also differ across industries. Therefore, this study investigates the pay-risk relationship in India, and whether the relationship is different across industries. To test the effect, ordinary least squares (OLS) regressions were performed with data from 86 Indian firms listed at the S&P BSE500 for the period 2014 – 2019. This study provides robust results of a significant relationship between CEO compensation and firm risk in India. Additionally, a robust significant relationship is found between CEO compensation and firm risk in labor-intensive industries, while there is no robust significant relationship found in capital-intensive industries. Furthermore, this study contributes to the existing literature by examining the pay-risk relationship across industries in an emerging market context.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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