This paper attempts to examine a canonical (simultaneous) relationship between service industry CEOs' compensation and corporate performance with respect to accounting-based and market-based performance measures. In addition, this study examines the effect of firm size on compensation. The results of this study suggest that executive compensation depends simultaneously on both market-based and accounting-based performance measures. EPS, ROA, ROE and Market Rate of Return are positively associated with both cash compensation and long-term compensation. Firm size is also positively related to the long-term compensation.
A Canonical Correlation Analysis of CEO Compensation and Corporate Performance in the Service IndustryWCOB Faculty Publications
Citation InformationShim, E. & Lee, J. (2003). A canonical correlation analysis of CEO compensation and corporate performance in the service industry. Review of Accounting & Finance, 2(3), 72-90. doi: 10.1108/eb027013