The effect of firm performance on executive compensation in socially responsible firms: the Indian evidence

Chetna Rath and Malabika Deo

International Journal of Indian Culture and Business Management, 2023, vol. 29, issue 2, 200-220

Abstract: The purpose of this paper is to examine the pay-performance sensitivity in the case of socially responsible companies and test whether all the performance measures have a consistent impact across firms having different pay scales. Taking NSE Nifty 100 ESG Index as the data sample, a panel of 69 firms for 2014-2019 has been analysed using two-step system GMM and the quantile regression with panel data (QRPD) model after sample splits. The findings reveal that accounting-based firm performance indicators are more significant than the market-based measures affecting remuneration. Moreover, pay-performance sensitivity is more visible in firms paying lesser compensation, and public/private ownership status also plays a significant role in determining executive pay. Our findings are helpful to policymakers as it stresses the determinants of pay-performance sensitivity across various pay-quantiles in ESG firms.

Keywords: executive compensation; firm performance; India; socially responsible companies; performance-pay sensitivity; ESG firms. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijicbm:v:29:y:2023:i:2:p:200-220

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