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| Author: | Schaefer, S. |
| Title: | The dependence of pay-performance sensitivity on the size of the firm |
| Journal: | Review of Economics and Statistics
1998 : AUG, VOL. 80:3, p. 436-443 |
| Index terms: | STATISTICS SENSITIVITY ANALYSIS COMPANIES |
| Language: | eng |
| Abstract: | The author analyzes the relationship between firm size and the extent to which executive compensation depends on the wealth of the firm's shareholders. The author uses a simple agency model to motivate an econometric model of this relationship. Estimating this model on chief executive officer (CEO) compensation data using nonlinear least squares, the author determines that pay-performance sensitivity appears to be approximately inversely proportional to the square root of firm size. |
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