Guy, Frederick (2000) CEO pay, shareholder returns, and accounting profits. International Journal of the Economics of Business 7 (3), pp. 263-274. ISSN 1357-1516.
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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.
|Keyword(s) / Subject(s):||accounting, chief executive officers, incentives in industry, stocks, wages, CEO pay, random coefficients|
|School or Research Centre:||Birkbeck Schools and Research Centres > School of Business, Economics & Informatics > Management|
|Date Deposited:||21 Mar 2007|
|Last Modified:||17 Apr 2013 12:33|
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