Executive compensation and firm performance: Evidence from Indian firms. Issue 3 (September 2016)

• Record Type: Journal Article
• Authors: Raithatha, Mehul; Komera, Surenderrao
• Is Part Of: IIMB management review. Volume 28:Issue 3(2016:Sep.)
• Page Start: 160
• Page End: 169
• Publication Date: 2016-09
• Subjects: Executive compensation -- Firm performance -- Business groups; Management -- Periodicals; Industrial management -- Periodicals; Industrial management; Management; India; Periodicals; 658
• DOI: 10.1016/j.iimb.2016.07.002
• Languages: English
• ISSNs: 0970-3896

Abstract

Abstract: The study examines the relationship between executive compensation and firm performance among Indian firms. The evidence suggests that firm performance measured by accounting, as well as market-based measures, significantly affects executive compensation. We also test for the presence of persistence in executive compensation by employing the system-generalised methods of moments (GMM) estimator. We find significant persistence in executive compensation among the sample firms. Further, we report the absence of pay–performance relationship among the smaller sample firms and business group affiliated firms. Thus, our findings cast doubts over the performance-based executive compensation practices of Indian business group affiliated firms.