An Examination of Economic Value Added and Executive Compensation

18 Pages Posted: 13 Jun 2002

See all articles by John P. Evans

John P. Evans

Curtin University - Centre for Research in Applied Economics

Robert T. Evans

Curtin University - Graduate School of Business

Abstract

Despite a growing literature, the relationship between the structure of executive compensation and firm performance is not fully understood. Furthermore, little work has been done on the link between Economic Value Added (EVA) as a measure of firm performance and the form of executive compensation. An examination of the compensation structure and economic value added of 209 companies in 1995 - 1998 provides evidence supporting incentive compensation. Economic Value Added is found to be positively and significantly related to incentive based compensation. Cash based remuneration, was found to be unrelated to EVA performance.

Keywords: Executive Compensation; Economic Value Added; Australia

Suggested Citation

Evans, John Philip and Evans, Robert T., An Examination of Economic Value Added and Executive Compensation. EFMA 2002 London Meetings, Available at SSRN: https://ssrn.com/abstract=313974 or http://dx.doi.org/10.2139/ssrn.313974

John Philip Evans (Contact Author)

Curtin University - Centre for Research in Applied Economics ( email )

GPO Box U1987
Perth, Western Australia 6845
Australia

Robert T. Evans

Curtin University - Graduate School of Business ( email )

Bentley WA 6102
Australia

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