Faculty Scholarship 1994 - Present

An Empirical Examination of Top Executive Compensation and Economic Performance in Financial Service Organizations

This paper investigates the determinants of CEO compensation in 73 financial institutions. It empirically examines the relationship between CEO compensation and accounting-based and market-based performance. The results suggest that CEO compensation is significantly and postively related to ROA and, to a lesser degree, to ROE and market-to-book assets. In addition, firm size shows a significant postive relationship with CEO total compensation as well as cash compensation (salary and bonus). The implication of this paper's findings is that financial CEO compensation is related not only to accounting-based performance, but also to market-based performance.