The DOI matches its Crossref record.
The Dependence of pay—Performance Sensitivity on the Size of the Firm
Abstract
I analyze the relationship between firm size and the extent to which executive compensation depends on the wealth of the firm's shareholders. I use a simple agency model to motivate an econometric model of this relationship. Estimating this model on chief executive officer (CEO) compensation data using nonlinear least squares, I determine that pay-performance sensitivity (as defined by Jensen and Murphy (1990b)) appears to be approximately inversely proportional to the square root of firm size (however measured). I also analyze the properties of pay- performance sensitivity for “teams” of executives working for the same firm and show it to have similar properties as CEO pay-performance sensitivity.
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Citations
Cited by
Frydman, C., & Jenter, D. (2010) · Annual Review of Financial Economics · doi:10.1146/annurev-financial-120209-133958 · Cited by 542
Performance Incentives within Firms: The Effect of Managerial Responsibility
Aggarwal, R. K., & Samwick, A. A. (2003) · The Journal of Finance · doi:10.1111/1540-6261.00579 · Cited by 298
Metadata
- Authors
- Schaefer, S.
- Venue
- Review of Economics and Statistics
- Publisher
- MIT Press - Journals
- Published
- 1998-08
- Volume
- 80
- Issue
- 3
- Pages
- 436-443
- ISSN
- 0034-6535 (ISSN-L)
- 1530-9142
- OpenAlex
- W2154115444
- Cited by
- 254
- References
- 0
- FWCI
- 21.52
- Type
- journal article
- Language
- en
- Open access
- closed
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- Schaefer, S. (1998). The Dependence of pay—Performance Sensitivity on the Size of the Firm. Review of Economics and Statistics. https://doi.org/10.1162/003465398557537
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
