This study examines board composition and CEO compensation structure as part of a simultaneous system that determines firm performance. Utilizing a principle agent framework, a positive relationship is hypothesized between incentive compensation structure and firm performance. Evaluating the function and behavior of the board of directors, it is hypothesized that board composition is positively related to firm performance but negatively related to incentive compensation structure. Using three-stage least squares regression estimation, this study does not find statistical evidence supporting the notion of a simultaneous system. There is, however, some evidence that compensation structure is negatively related to firm performance and board independence is positively related to compensation structure.


Sell, John


Business Economics

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



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