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EXECUTIVE INCENTIVE COMPENSATION SCHEMES AND THEIR IMPACT ON CORPORATE PERFORMANCE: EVIDENCE FROM NEW ZEALAND SINCE COMPENSATION DISCLOSURE REQUIREMENTS BECAME EFFECTIVE

FAYEZ A. ELAYAN (Massey University, New Zealand)
JAMMY S.C. LAU (Massey University, New Zealand)
THOMAS O. MEYER (Massey University, New Zealand)

Studies in Economics and Finance

ISSN: 1086-7376

Article publication date: 1 January 2003

Abstract

Incentive‐based executive compensation is regarded as a mechanism for alleviating agency problems between executives and shareholders. Seventy‐three New Zealand (NZ) listed companies are used to examine the relationship between executive incentive compensation schemes (ICS) and firm performance. The results suggest that neither compensation level nor adoption of an ICS are significantly related to returns to shareholders or ROA. However, there is a statistically significant relationship between Tobin's q and both CEO compensation and executive share ownership. Further, the evidence suggests the recent compensation disclosure requirements in NZ are not yet stringent enough to allow adequate analysis of the link between ICSs and corporate performance.

Citation

ELAYAN, F.A., LAU, J.S.C. and MEYER, T.O. (2003), "EXECUTIVE INCENTIVE COMPENSATION SCHEMES AND THEIR IMPACT ON CORPORATE PERFORMANCE: EVIDENCE FROM NEW ZEALAND SINCE COMPENSATION DISCLOSURE REQUIREMENTS BECAME EFFECTIVE", Studies in Economics and Finance, Vol. 21 No. 1, pp. 54-92. https://doi.org/10.1108/eb028769

Publisher

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MCB UP Ltd

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