Determinants and value relevance of UK CEO pay slice

Al-Najjar, Basil, Ding, Rong and Hussainey, Khaled (2016) Determinants and value relevance of UK CEO pay slice. International Review of Applied Economics, 30 (3). pp. 403-421. ISSN 0269-2171

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Official URL: https://doi.org/10.1080/02692171.2015.1105938

Abstract

This paper studies the CEO pay slice (CPS) of UK listed firms during the period 2003 to 2009. We investigate the determinants of CPS. We study the links between CPS and measures of firm performance. We find that firms with higher levels of corporate governance ratings and those with more independent boards tend to have higher CPS. In addition, we find that CEOs are more likely to receive lower compensation when they chair the board and when they work in firms with large board size. We also find that higher CPS is positively associated with firm performance after controlling for the firm-specific characteristics and corporate governance variables. We get compatible results when we examine the association between equity-based CPS and firm performance. Our results remain robust to alternative accounting measures of firm performance. Our results suggest that high UK CPS levels do indeed reflect top managerial talent rather than managerial power.

Item Type: Article
Uncontrolled Keywords: CEO pay slice, firm performance, corporate governance ratings, corporate governance mechanisms
Subjects: N100 Business studies
N200 Management studies
N300 Finance
Department: Faculties > Business and Law > Newcastle Business School
Depositing User: Elena Carlaw
Date Deposited: 27 Apr 2021 16:02
Last Modified: 31 May 2021 14:39
URI: http://nrl.northumbria.ac.uk/id/eprint/46038

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