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A Canonical Correlation Analysis of CEO Compensation and Corporate Performance in the Service Industry

Eunsup “Daniel” Shim (Department of Accounting, College of Business, Sacred Heart University, 5151 Park Avenue, Fairfield, CT, 06432)
Jooh Lee (Department of Management and Information, School of Business, Rowan University, Glassboro, New Jersey, 08028)

Review of Accounting and Finance

ISSN: 1475-7702

Article publication date: 1 March 2003

419

Abstract

This paper attempts to examine a canonical (simultaneous) relationship between service industry CEOs' compensation and corporate performance with respect to accounting‐based and market‐based performance measures. In addition, this study examines the effect of firm size on compensation. The results of this study suggest that executive compensation depends simultaneously on both market‐based and accounting‐based performance measures. EPS, ROA, ROE and Market Rate of Return are positively associated with both cash compensation and long‐term compensation. Firm size is also positively related to the long‐term compensation.

Keywords

Citation

“Daniel” Shim, E. and Lee, J. (2003), "A Canonical Correlation Analysis of CEO Compensation and Corporate Performance in the Service Industry", Review of Accounting and Finance, Vol. 2 No. 3, pp. 72-90. https://doi.org/10.1108/eb027013

Publisher

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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