Linking CEO pay to firm performance: empirical evidence from the electric utility industry

Augustine I. Duru (Department of Accounting, American University)
Raghavan J. Iyengar (Department of Economic & Business, The Catholic University of America)

Managerial Finance

ISSN: 0307-4358

Publication date: 1 September 1999

Abstract

Outlines previous research on the relationship between CEO compensation and firm performance, arguing that in regulated industries the executive skills sought and performance measures used might differ from those in un‐regulated firms. Uses 1992‐1995 data on the US electricity industry to investigate the interaction between four compensation components (salary, bonus, long‐term compensation and stock options) and five performance measures (market returns, return on assets, earnings per share, operating cash flow per share and sales growth). Presents the results, which suggest that changes in bonuses and stock options are closely related to changes in market return and sales growth respectively. Considers the reasons for this, the limitations of the study and some avenues for further research.

Keywords

Citation

Augustine I. Duru and Raghavan J. Iyengar (1999) "Linking CEO pay to firm performance: empirical evidence from the electric utility industry ", Managerial Finance, Vol. 25 No. 9, pp. 21-33

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DOI

: https://doi.org/10.1108/03074359910766136

Publisher

:

MCB UP Ltd

Copyright © 1999, MCB UP Limited

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