Executive compensation and firm performance: adjustment dynamics, non-linearity and asymmetry

Giorgio Canarella and Mahmoud M. Nourayi
Additional contact information
Giorgio Canarella: Department of Economics and Statistics, California State University, Los Angeles, USA, Postal: Department of Economics and Statistics, California State University, Los Angeles, USA
Mahmoud M. Nourayi: Department of Accounting, Loyola Marymount University, LA, USA, Postal: Department of Accounting, Loyola Marymount University, LA, USA

Managerial and Decision Economics, 2008, vol. 29, issue 4, pages 293-315

Abstract: The relationship between executive compensation and firm performance is a field of intense theoretical and empirical research. The purpose of this study is to gain additional insights into the nature of this relationship by examining empirically the relatively unexplored areas of its dynamics of adjustment, as well as its non-linearity. The findings of this study show strong evidence in support of the view that (a) executive compensation is characterized by a dynamic process of adjustment, and (b) the relationship between executive compensation and firm performance is non-linear and asymmetric. Additionally, the structure of asymmetry is found to be dependent on the measure of performance. Convexity characterizes the asymmetry of the relationship between executive compensation and market returns, while concavity distinguishes the asymmetry of the relationship between executive compensation and accounting returns. Copyright © 2008 John Wiley & Sons, Ltd.

Date: 2008
View list of references

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1368 Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wly:mgtdec:v:29:y:2008:i:4:p:293-315

Access Statistics for this article

Managerial and Decision Economics is edited by Paul H. Rubin

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Series data maintained by Christopher F. Baum ().