Efficient markets, managerial power, and CEO compensation

Bognanno, Michael L.

doi:10.15185/izawol.34

Cited by 2 publications

(2 citation statements)

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“…However, before discussing the precise details of RST, a brief overview of existing theories will be given. Since several excellent and detailed reviews of current theories are already available (Bognanno, 2014;Conyon, 2006;Devers et al, 2007;Otten, 2007), our systematic outline of the "efficient market" and the "managerial power" theory will be brief. Subsequently, we will add a systematic discussion of the relational signalling theory.…”

Section: Signalling Theorymentioning

confidence: 99%

Relational Signalling and the Rise of CEO Compensation

Veen¹,

Wittek²

2016

Long Range Planning

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Section: Signalling Theorymentioning

confidence: 99%

Relational Signalling and the Rise of CEO Compensation

Veen¹,

Wittek²

2016

Long Range Planning

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“…It is important to determine the year-on-year analysis of the relationship between chief executive officer (CEO) remuneration and business performance because of the division between ownership and management in these companies. This leads to an agency problem, whereby managers follow their self-interest above the interest of stakeholders (Bognanno, 2014;Kang, Kumar, & Lee, 2006). This is specifically true in the SOCs' environment because the principal is unable to monitor the CEO as the agent (Li & Xia, 2007).…”

Section: Introductionmentioning

confidence: 99%

The year-on-year analysis of the relationship between chief executive officer remuneration and state-owned company performance in South Africa

Bezuidenhout

Bussin

2020

SA j. hum. resour. manag.

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Orientation: Executive remuneration remains very much at the centre of academic and policy debates. There seems to be a lack of consensus on the origins of the substantial increase in executive remuneration.Research purpose: This study aimed to further explore the relationship between chief executive officer (CEO) remuneration and state-owned company (SOC) performance by investigating the year-on-year behaviour of the relationship. The observed trends regarding the direction and strength of the relationship inform business and economic occurrences that provide an organisation with an in-depth understanding of the relationship.Motivation for the study: The rationale for this analysis was to broaden the understanding of the behaviour of the relationship over a period by studying the year-on-year correlation coefficients.Research approach/design and method: This quantitative, longitudinal study collected secondary data from the annual reports of 18 Schedule 2 SOCs over the period 2006 to 2014. Spearman’s rank correlation coefficient was the principal statistical technique utilised in the study.Main findings: Overall, the results revealed a fluctuation in the relationship between CEO remuneration and SOC performance with turnover having the most stable relationship with both fixed pay and total remuneration.Practical/managerial implications: The use of discretion in the determination of CEO remuneration within SOCs is likely to attract attention considering the fluctuating, sometimes volatile, relationship between the constructs. This will create the motivation for dynamic-policy frameworks to ensure consistency and fairness.Contribution/value add: The value of this research is that SOC remuneration committees now have empirical evidence of the importance that turnover plays as a performance measure.

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Efficient markets, managerial power, and CEO compensation

Cited by 2 publications

References 20 publications

Relational Signalling and the Rise of CEO Compensation

Relational Signalling and the Rise of CEO Compensation

The year-on-year analysis of the relationship between chief executive officer remuneration and state-owned company performance in South Africa

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