Open AccessCorporate Performance, Stock Option Compensation, And Measurement Error In CEO Pay
Author(s) -
Emmett H. Griner
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v12i1.5830
Subject(s) - salary , executive compensation , stock options , proxy (statistics) , compensation (psychology) , business , stock (firearms) , accounting , econometrics , actuarial science , economics , statistics , finance , corporate governance , mathematics , psychology , engineering , mechanical engineering , market economy , psychoanalysis
Previous investigations of the association between executive pay and corporate performance have relied heavily on the sum of salary and bonus as a proxy for total compensation. This study shows that the sum of salary and bonus contains a substantial amount of unsystematic measurement error. The results underscore the need for future research in this area to use compensation proxies that incorporate executive stock options.