Pay-performance sensitivity during financial distress: Did the financial crisis change payperformance sensitivity?
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
This study examines the existence of pay-performance sensitivity in total compensation and bonus
during the financial crisis, using data between 2007-2010 from Swedish 196 listed firms. We
perform panel data regression analysis of CEO compensation on financial performance measured
as stock returns. Our results indicate that there is, although not significant, a weak positive
relationship between CEO compensation and firm performance during 2007-2010. However
during 2009-2010 in a market state defined as post-crisis we find weak negative pay-performance
sensitivity at a significance level of 10 %. Nevertheless, as regards to the bonus paid to executives
there was a significantly positive relationship relative bonus % and firm performance. These
results contribute to our understanding of the pay-performance sensitivity in times of financial
disturbance, highly relevant to the existing debate considering CEO compensation.
Place, publisher, year, edition, pages
2015. , 42 p.
Pay – performance sensitivity, CEO Compensation, Firm performance, Agency theory, Bonus
IdentifiersURN: urn:nbn:se:uu:diva-255729OAI: oai:DiVA.org:uu-255729DiVA: diva2:823370
Subject / course
Master Programme in Accounting, Auditing and Analysis