Abstract
This is an exploratory study that takes a machine learning approach using artificial neural networks to investigate a conjectured relationship between CEO remuneration and debt of New Zealand local councils. While prior literature reported an inverse relationship between CEO remuneration and financial distress in the private sector, no study is known to have yet examined a relationship between CEO remuneration and debt in the public/government sector. Using data from seventy-eight New Zealand local councils, the results reveal that a neural network model can reliably predict whether a local council holds a high amount of debt with CEO remuneration as the key predictor variable. The results strongly indicate that an underlying statistical relationship likely exists between CEO remuneration and the amount of council debt in the presence of political competition. These results run contrary to previous findings in the private sector and offer a promising ground for future confirmatory studies to further investigate this relationship.