This paper is an empirical analysis of CEO compensation structure and the relationship compensation structure has on the financial performance of the firm. This Independent Study hypothesizes that the greater percentage of incentive based compensation a CEO receives has a positive relationship with firm performance. The model used in this paper is a two stage least square model because economic theory suggests a simultaneous relationship between compensation structure and firm performance. The study uses a sample of CEOs from 325 manufacturing firms from COMPUSTAT. Compensation structure is found to have no statistically significant relationship with firm performance; therefore, the hypothesis of this study is not supported.
Purcell, Scott D., "Does CEO Pay Structure Matter? Research and Empirical Analysis on the Relationship CEO Compensation Structure Has on the Financial Performance of the Firm" (2014). Senior Independent Study Theses. Paper 6042.
Business Administration, Management, and Operations | Business and Corporate Communications
compensation structure, firm performance, CEO
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2014 Scott D. Purcell