Is Additional CEO Remuneration a Performance Driver? DAX CEOs Evidence

Costa, Magali; Lisboa, Inês; Marzinzik, René

http://hdl.handle.net/10400.8/9026

Use this identifier to reference this record.

Name:	Description:	Size:	Format:
2023_Costa et al.pdf		481.44 KB	Adobe PDF	Download

Send Feedback

Authors

Costa, Magali

Lisboa, Inês

Marzinzik, René

Abstract(s)

This study aims to understand the impact of the additional remuneration of the Chief Executive Officer (CEO) over the mean remuneration of the board of directors on firms’ financial performance. The objective is to understand if the highest compensation of the CEO is a firm performance driver. In addition to the impact of total remuneration, the different remuneration components were split and analyzed. An unbalanced panel data of listed companies in DAX–Germany over the period from 2006 until 2019 is analyzed. Using dynamic methodology to estimate the models, the results show that higher additional remuneration positively explains higher firm performance measured using both accounting and market measures. The impact is also evident when additional remuneration components are analyzed. These results support the tournament theory, since when CEOs feel rewarded, they are more efficient in increasing the firm’s performance. Moreover, the firms’ financial characteristics, as well as macroeconomic factors, are also relevant to explaining its performance.

Keywords

CEO remuneration Additional remuneration Remuneration gap Firm performance Germany

URI

http://hdl.handle.net/10400.8/9026

Citation

Costa, M.; Lisboa, I.; Marzinzik, R. Is Additional CEO Remuneration a Performance Driver? DAX CEOs Evidence. Risks 2023, 11, 133. https://doi.org/10.3390/risks11070133