Executive Compensation and Corporate Performance: Evidence from Thrift Institutions
Rebuilding Banking: Proceedings of the 27th Annual Conference on Bank Structure and Performance, pp. 227-247, 1991
23 Pages Posted: 26 Nov 2008
Date Written: May 1, 1991
This study uses data from thrift institutions to provide new evidence on the relation between executive pay and firm performance. We find a positive and statistically significant relation between CEO pay and firm performance as measured by both return on assets and return on equity. Moreover, the relation is robust across alternative specifications of the model. This evidence is consistent with the view that a firm's executive compensation policy is designed to reduce the agency costs between managers and shareholders.
Keywords: agency costs, CEO pay, compensation, deposit insurance, executive compensation, thrift
JEL Classification: E53, G18, G21, G28, G34, J33
Suggested Citation: Suggested Citation