Does CEO compensation matter in boosting firm performance? Evidence from listed French firms

Zoghlami, Faten

doi:10.1002/mde.3219

Cited by 20 publications

(13 citation statements)

References 54 publications

(84 reference statements)

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“…Firm size has negative and statistically significant effect on firm performance within the two models at a 5 percent level. The results are in line with those of prior studies [88,89]. Finally, the coefficients of firm age and R&D intensity are negative but not significant.…”

Section: Multivariate Regression Analysissupporting

confidence: 90%

The Moderating Effect of Firm Visibility on the Corporate Social Responsibility-Firm Financial Performance Relationship: Evidence from France

Achour¹,

Boukattaya²

2022

Corporate Social Responsibility

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This research aims to analyze the role played by firm visibility in moderating the relationship between Corporate Social Responsibility (CSR) and Firm Financial Performance (FFP). Based on the legitimacy theory, a firm’s responses to stakeholder’s expectations would be affected by its public visibility; we hypothesize a positive link between CSR and firm visibility. Moreover, visibility is expected to moderate the CSR-FFP relationship. We applied a Moderated Regression Analysis using the aggregate ESG scores as a CSR proxy on a panel data of listed French Companies (SBF120) over the period 2008–2017. Our findings are in line with legitimacy theory, suggesting that social initiatives would be mean to strengthen the legitimacy and to secure “license to operate”. Furthermore, firm visibility would be a contingency variable that moderates positively CSR-FFP relationship.

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Section: Multivariate Regression Analysissupporting

confidence: 90%

The Moderating Effect of Firm Visibility on the Corporate Social Responsibility-Firm Financial Performance Relationship: Evidence from France

Achour¹,

Boukattaya²

2022

Corporate Social Responsibility

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“…In the same vein, we examine the effect of contemporaneous as well as previous performance on executive pay in US companies. More recently, Zoghlami (2021) have used a sample of 155 listed French companies on SBF 120, in the period 2009-2018, and have showed that CEO compensation is positively linked to firm performance.…”

Section: The Firm Performance and Its Relationship With Executive Compensationmentioning

confidence: 99%

The determinants of CEO compensation: new insights from United States

Bouteska

Mefteh‐Wali

2021

JAAR

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PurposeThe purpose of this paper is to examine the determinants of CEO compensation for sample of the US firms. It emphasizes the presence of executive compensation persistence and the importance of CEO power besides performance while setting CEO pay.Design/methodology/approachThe empirical analysis is conducted on a large sample of US firms during the period 2006–2016. It is based on the generalized method of moments (GMM) models to assess the impact of numerous factors on CEO compensation.FindingsThe main findings reveal that firm performance proxied by accounting-based proxies, as well as market-based proxies, plays a significant role in explaining variations in levels of executive compensation. Moreover, there is a significant persistence in executive compensation among the US sample firms. The authors also document that poor governance conditions (managerial power hypothesis) lead to high compensation levels offered to CEO.Research limitations/implicationsAt the end, without a doubt, the analysis has some limitations that prompt the authors to consider future research directions. One future research avenue that can help better explain the effect of firm performance on the CEO compensation is to study this issue using an international sample to determine whether country-level characteristics (e.g. creditor rights, shareholder rights and the enforcement climate) can influence this relationship. Furthermore, it can be worthwhile to deepen the analysis of CEO power and its impact on CEO compensation. It will be interesting to emphasize how the CEO power interacts with the other governance characteristics and some CEO attributes as CEO gender.Practical implicationsThe paper's findings have implications for practitioners, policymakers and regulatory authorities. First, the findings inform regulators that performance is not the only determinant of CEO pay level. This may warrant increased firm disclosure of the details of the pay structure. Second, the study offers insights to policymakers and members of boards of directors interested in enhancing the design of executive compensation and internal corporate governance, to better align managerial incentives to shareholder interests. Firms should strengthen the board independence and properly constitute the board committees (compensation, risk, nomination…).Originality/valueThis paper presents a comprehensive overview of the CEO compensation determinants. It supplements the classic pay-for-performance sensitivity predictions with insights gained from the dynamics of wage setting theory and managerial power theory. The authors develop a composite index to measure the CEO power in order to test the impact of CEO attributes on CEO pay. Additionally, it verifies whether the determinants of CEO pay depend on firm age and size.

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“…Although most research evidences show that executive compensation incentive can improve corporate performance, there are still many problems in the application of incentive executive compensation incentive. Zoghlami (2021) [20] found that increasing executive compensation seemed to improve company performance, but it damaged the stock market value of the company. The author believed that attractive compensation may improve the service of executives in achieving the goals of shareholders, but investors did not seem to like the increase of executive compensation.…”

Section: The Relationship Between Executive Compensation and Corporat...mentioning

confidence: 99%

Incentive Executive Compensation Management System: A Literature Review

2022

2022 2nd International Conference on Management Science and Industrial Economy Development (MSIED 2022)

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Senior executives control the operation of the enterprise. Whether the executive compensation management is reasonable and whether it can meet the needs of executives will directly affect the operation efficiency and management efficiency of the whole enterprise. In modern enterprises, the separation of ownership and management is a major feature, and the emergence of agency issues is inevitable, mainly due to adverse selection and moral hazard under the background of information asymmetry. Determining executive compensation by evaluating corporate performance, on the one hand, can mobilize the enthusiasm of executives; on the other hand, it can effectively reduce the agency cost caused by information asymmetry. Based on the principal-agent theory, this paper firstly discusses the agency problem caused by the information asymmetry between shareholders and executives, and then points out that executive compensation, as an incentive means, can effectively alleviate the agency conflict. Previous studies have shown that there is a positive correlation between executive compensation and corporate performance. Then, this paper summarizes the research on the compensation dispersion and compensation stickiness in executive compensation management, so as to put forward some considerations and suggestions for the design of executive compensation management system. Finally, it makes a summary and puts forward the prospect of future research on the shortcomings of existing studies.

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Does CEO compensation matter in boosting firm performance? Evidence from listed French firms

Cited by 20 publications

References 54 publications

The Moderating Effect of Firm Visibility on the Corporate Social Responsibility-Firm Financial Performance Relationship: Evidence from France

The Moderating Effect of Firm Visibility on the Corporate Social Responsibility-Firm Financial Performance Relationship: Evidence from France

The determinants of CEO compensation: new insights from United States

Incentive Executive Compensation Management System: A Literature Review

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