Executive Compensation and Firm Performance Relationship

IF 0.3 Q4 BUSINESS, FINANCE Review of Pacific Basin Financial Markets and Policies Pub Date : 2022-03-03 DOI:10.1142/s0219091522500084

U. Kayani, C. Gan

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引用次数: 4

Abstract

The relationship between executive compensation and firm performance is well documented in the existing literature. However, in the case of Asia Pacific firms, the least attention is paid while investigating this relationship. This study examines the relationship between executive compensation and firm performance in the Asia Pacific firms throughout 2007–2019. We use the total salary paid to chief executive officers and equivalent, the total compensation paid to the CEO, and the equivalent and total salaries and bonuses paid to the CEO and equivalent as a measure of executive compensation. For the firm performance, both accounting measure (ROA) and market measure Tobin’s [Formula: see text] (TQ), and various control variables were used. We found that a firm performance has a positive relationship with total compensation paid to CEO and total salaries and bonuses paid to the CEO. Our results support the agency theory by confirming that higher CEO compensation will lead towards higher firm performance by motivating executives to maximize shareholder benefits. However, the total salary does not have any significant relationship. The overall result of the study indicates that the results of the Asia Pacific regions complement the results obtained in another part of the developed world. The results are supported by the social comparison theory. The study has a practical implication for policymakers, business owners, shareholders, and executives by suggesting aligning their business strategies based on compensation parameters for achieving the best firm performance.

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高管薪酬与企业绩效关系

高管薪酬与公司绩效之间的关系在现有文献中有很好的记录。然而，就亚太地区的公司而言，在调查这种关系时，关注度最低。本研究考察了2007-2009年亚太地区企业高管薪酬与企业绩效之间的关系。我们使用支付给首席执行官和同等人员的总工资、支付给首席首席执行官的总薪酬、支付给CEO的同等人员和总工资及奖金作为高管薪酬的衡量标准。对于公司业绩，使用了会计计量（ROA）和市场计量托宾[公式：见正文]（TQ）以及各种控制变量。我们发现，公司业绩与支付给首席执行官的薪酬总额以及支付给首席首席执行官工资和奖金总额呈正相关。我们的研究结果支持了代理理论，证实了更高的首席执行官薪酬将通过激励高管实现股东利益最大化来提高公司业绩。然而，总工资与工资之间没有任何显著的关系。研究的总体结果表明，亚太区域的结果与发达世界另一地区的结果相辅相成。研究结果得到了社会比较理论的支持。该研究建议根据薪酬参数调整他们的商业战略，以实现最佳公司业绩，这对政策制定者、企业主、股东和高管都有实际意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Review of Pacific Basin Financial Markets and Policies BUSINESS, FINANCE-

CiteScore

1.30

自引率

11.10%

发文量

期刊介绍： This journal concentrates on global interdisciplinary research in finance, economics and accounting. The major topics include: 1. Business, economic and financial relations among the Pacific rim countries. 2. Financial markets and industries. 3. Options and futures markets of the United States and other Pacific rim countries. 4. International accounting issues related to U.S. companies investing in Pacific rim countries. 5. The issue of and strategy for developing Tokyo, Taipei, Shanghai, Sydney, Seoul, Hong Kong, Singapore, Kuala Lumpur, Bangkok, Jakarta, and Manila as international or regional financial centers. 6. Global monetary and foreign exchange policy, and 7. Other high quality interdisciplinary research in global accounting, business, economics and finance.

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