Executive compensation is one of the most crucial elements in determining firm performance because similar to the commander-in-chief of an army, a chief executive officer (CEO) of a company makes corporate decisions with the aim to maximize profit. This paper will study the level of performance-based executive compensation used by the U.S.-based multinational corporations (MNCs) and the U.S. domestic corporations (DCs) to control for external factors of the firms and the relationship between firm performance and performance-based executive compensation. We use cross-sectional ordinary least squares regression to support the two-stage least squares model in testing for our hypotheses. The empirical results suggest that as the level of foreign operation increases for MNCs, the performance-based executive compensation decreases because of the negative relationship cet. par., but firm performance has positive correlation to performance-based executive compensation. Our results of the primary model do not support our hypothesis of our first model.


Sell, John


Business Economics


Business Administration, Management, and Operations | Business and Corporate Communications | Corporate Finance | Strategic Management Policy


Executive Compensation, Multinational Corporations, Domestic Corporations, Firm Performance

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



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