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The effects of firm size and firm performance on CEO pay in Canada: A Re‐Examination and Extension
Author(s) -
Yang Caroline,
Singh Parbudyal,
Wang Jing
Publication year - 2020
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.1542
Subject(s) - shareholder , equity (law) , return on assets , business , cash , enterprise value , accounting , return on equity , revenue , shareholder value , executive compensation , economics , monetary economics , finance , corporate governance , profitability index , law , political science
Abstract Using insights from academic and practitioners' perspectives and recent data, this paper extends the literature by using pay variables that are typically used by practitioners, including those not studied in previous academic research. Consistent with previous findings, firm size, measured by three‐year average revenues, has strong effects on CEO pay. However, the relationship is not the same for firms of different sizes. Revenue elasticity is strong among small companies and disappears for medium and large companies. Firm performance, measured by accounting‐based measures (return on assets and return on equity), and market‐based measures (total shareholder return and shareholder value), have little effects on CEO cash compensation, but strong positive effects on equity compensation. Implications for research and practice are discussed.