The remuneration of CEOs and corporate financial performance in Norway

Michael FIRTH, Johan Chr. LOHNE, Ruth ROPSTAD, Jarle SJO

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

    16 Citations (Scopus)

    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.
    Original languageEnglish
    Pages (from-to)291-301
    Number of pages11
    JournalManagerial and Decision Economics
    Volume17
    Issue number3
    DOIs
    Publication statusPublished - 1 May 1996

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    Industry
    Economics
    Wages
    Profitability
    Compensation and Redress
    Norway
    Chief executive officer
    Corporate financial performance
    Remuneration
    Stockholders
    Chief executives
    Financial performance
    Stock returns
    CEO pay
    Executive compensation
    Pay-for-performance
    Value added
    Executive pay
    Stock exchange
    Social structure

    Cite this

    FIRTH, Michael ; LOHNE, Johan Chr. ; ROPSTAD, Ruth ; SJO, Jarle. / The remuneration of CEOs and corporate financial performance in Norway. In: Managerial and Decision Economics. 1996 ; Vol. 17, No. 3. pp. 291-301.
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    title = "The remuneration of CEOs and corporate financial performance in Norway",
    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.",
    author = "Michael FIRTH and LOHNE, {Johan Chr.} and Ruth ROPSTAD and Jarle SJO",
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    The remuneration of CEOs and corporate financial performance in Norway. / FIRTH, Michael; LOHNE, Johan Chr.; ROPSTAD, Ruth; SJO, Jarle.

    In: Managerial and Decision Economics, Vol. 17, No. 3, 01.05.1996, p. 291-301.

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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    AU - ROPSTAD, Ruth

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