TY - JOUR
T1 - Do institutional framework and its threshold matter in the sensitivity of CEO pay to firm performance? Fresh insights from an emerging market economy
AU - Olaniyi, Clement Olalekan
AU - Young, Ademola Obafemi
AU - Vo, Xuan Vinh
AU - Al-Faryan, Mamdouh Abdulaziz Saleh
N1 - Publisher Copyright:
© 2022 John Wiley & Sons, Ltd.
PY - 2022/3/16
Y1 - 2022/3/16
N2 - This study examines the role of institutional quality and its threshold in the sensitivity of CEO pay to firm performance in an emerging market economy, using a generalized method of moments, Driscoll and Kraay's nonparametric covariance matrix estimator, and robust dynamic panel threshold. Bureaucratic quality and corruption control weaken performance-based pay for CEOs, while law and order strengthen it. The overall institutions allow boardroom backscratching which biases executive compensation contracts. The study shows that the country operates below the institutional quality threshold values required to spur performance-based pay for CEOs. The study concludes that institutions matter in CEO pay-firm performance nexus.
AB - This study examines the role of institutional quality and its threshold in the sensitivity of CEO pay to firm performance in an emerging market economy, using a generalized method of moments, Driscoll and Kraay's nonparametric covariance matrix estimator, and robust dynamic panel threshold. Bureaucratic quality and corruption control weaken performance-based pay for CEOs, while law and order strengthen it. The overall institutions allow boardroom backscratching which biases executive compensation contracts. The study shows that the country operates below the institutional quality threshold values required to spur performance-based pay for CEOs. The study concludes that institutions matter in CEO pay-firm performance nexus.
UR - http://www.scopus.com/inward/record.url?scp=85126295551&partnerID=8YFLogxK
U2 - 10.1002/mde.3603
DO - 10.1002/mde.3603
M3 - Article
AN - SCOPUS:85126295551
SN - 1099-1468
JO - Managerial and Decision Economics
JF - Managerial and Decision Economics
ER -