CEO Pay, Shareholder Returns and Accounting Profitability

Frederick Guy

Working Papers from Centre for Business Research, University of Cambridge

Abstract: We assess the impact on ceo pay (including salary, cash bonus, and benefits in kind) of changes in both accounting and shareholder returns in 99 british companies in the years 1972-89. After correcting for heterogeneity biases inherent in the standard specifications of the problem, we find a strong positive relationship between ceo pay and within-company changes in shareholder returns, and no statistically significant relationship between ceo pay and within-company changes in accounting returns. Differences between firms in long term average profitability do appear to have a substantial effect on ceo pay, while differences between firms in shareholder returns add nothing to the within-firm pay dynamics. These findings call into question the rationale for explicitly share-based incentive schemes.

Keywords: ceo pay; random coefficients (search for similar items in EconPapers)
JEL-codes: C23 J33 L21 (search for similar items in EconPapers)
Date: 2000-03
Note: PRO-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.jbs.cam.ac.uk/wp-content/uploads/2023/05/cbrwp155.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp155

Access Statistics for this paper

More papers in Working Papers from Centre for Business Research, University of Cambridge
Bibliographic data for series maintained by Ruth Newman ().