Title

The remuneration of CEOs and corporate financial performance in Norway

Document Type

Journal article

Source Publication

Managerial and Decision Economics

Publication Date

5-1-1996

Volume

17

Issue

3

First Page

291

Last Page

301

Abstract

Economics and management literatures advocate that senior company executives should be remunerated on the basis of the financial performance of the firms they manage. This helps align the interests of management with those of stockholders. There are, however, problems in implementing pay for performance schemes and these, along with other factors, may lead to there being no empirical relationship between compensation and stockholder returns. This study set out to explore the determinants of chief executive compensation in Norwegian stock exchange listed firms. To date there have been very few studies on this topic using data from Norway; most previous research has employed American data. The results show a positive relationship between CEO pay and corporate size but there was no significant association between remuneration and corporate financial performance as measured by accounting profitability and as measured by stock returns. Estimates of the value added by companies were significantly related to chief executive pay. There was also a positive and significant relationship between a CEO’s compensation and the average wage level of the company. This association may be due to the unique characteristics of Norway’s social and economic structure.

DOI

10.1002/(SICI)1099-1468(199605)17:3<291::AID-MDE752>3.0.CO;2-X

Print ISSN

01436570

Publisher Statement

Copyright © 1996 John Wiley & Sons, Ltd. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

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