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Executive Compensation, Corporate Governance and Corporate Performance: A Simultaneous Equation Approach

Ntim, Collins G., Lindop, Sarah, Osei, Kofi A. and Thomas, Dennis A. (2015) Executive Compensation, Corporate Governance and Corporate Performance: A Simultaneous Equation Approach. Managerial and Decision Economics, 36 (2). pp. 67-96. ISSN 01436570

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Abstract

This paper investigates the association between executive compensation and performance. It uniquely utilises a comprehensive set of corporate governance mechanisms within a three-stage least squares (3SLS) simultaneous equation framework. Results based on estimating a conventional single equation model indicate that the executive pay and performance sensitivity is relatively weak, whereas those based on estimating a 3SLS model generally suggest improved executive pay and performance sensitivity. Our findings highlight the need for future research to control for possible simultaneous interdependencies when estimating the executive pay and performance link. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, executive pay and performance proxies

Item Type: Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Schools: The Business School
The Business School > Quantitative Analysis Research Group
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Depositing User: Sara Taylor
Date Deposited: 28 Jan 2014 14:53
Last Modified: 03 Dec 2016 13:38
URI: http://eprints.hud.ac.uk/id/eprint/19536

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