Determinants and value relevance of UK CEO pay slice

Basil Al-najjar, Rong Ding, Khaled Hussainey

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    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 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.
    Original languageEnglish
    Pages (from-to)403-421
    Number of pages19
    JournalInternational Review of Applied Economics
    Issue number3
    Early online date22 Jan 2016
    Publication statusPublished - 3 May 2016


    • CEO pay slice
    • firm performance
    • corporate governance ratings
    • corporate governance mechanisms


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