Pay-Performance Sensitivity and Firm Risk: The New Zealand Evidence

Amza, Raluca Elena

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Pay-Performance Sensitivity and Firm Risk: The New Zealand Evidence

Amza, Raluca Elena

Cite this item: Amza, R. E. (2012). Pay-Performance Sensitivity and Firm Risk: The New Zealand Evidence (Thesis, Master of Business). University of Otago. Retrieved from http://hdl.handle.net/10523/2273

Permanent link to OUR Archive version: http://hdl.handle.net/10523/2273

Date: 2012

Advisor: Roberts, Helen

Degree Name: Master of Business

Degree Discipline: Department of Accountancy & Finance

Publisher: University of Otago

Keywords: Pay Performance Sensitivity; Firm Risk; Compensation; Compensation Committee

Research Type: Thesis

Languages: English

Abstract:

The study finds evidence that CEO pay-performance sensitivity decreases in the variance of stock returns for NZ publicly listed firms during 1997 to 2005. Furthermore, CEOs in firms with more volatile stock prices have less performance-based compensation. Lower estimated pay-performance sensitivity indicates a weaker link between CEO pay and performance suggesting that NZ CEO pay is less affected by changes in firm value compared to their US counterparts. However, opportunistic CEOs use their presence on the compensation committee and their ability to influence the pay-setting process to divorce their option remuneration from firm performance.

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Pay-Performance Sensitivity and Firm Risk: The New Zealand Evidence

Pay-Performance Sensitivity and Firm Risk: The New Zealand Evidence

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