Ownership Concentration and Sensitivity of Executive Pay to Accounting Performance Measures: Evidence from Publicly and Privately-Held Insurance Companies
Journal of Accounting & Economics, Vol 28, No 2, December 1999
Posted: 15 Feb 2000
In this paper we investigate the relation between CEO compensation and accounting performance measures in a sample of publicly- and privately-held property-liability insurance companies. We find a significant positive association between return on assets and the level of compensation for publicly-held insurers. Consistent with optimal contracting theory, we find no such relationship for privately-held insurers. We also find that the change in compensation is significantly more sensitive to the change in return on assets for publicly-held insurers than privately-held insurers. Results suggest that within privately-held firms, CEO compensation is less based on objective measures like accounting information and more on subjective measures.
Note: This is a description of the paper and not the actual abstract.
JEL Classification: C23, J33, M41
Suggested Citation: Suggested Citation