The pay-performance relationship for Malaysian public listed firms
The purpose of this study is to examine the pay-performance relationship for Malaysian public listed firms. It is often argued whether executive compensation is positively linked to firm performance and for organizations it is hard to justify their compensation decisions. Therefore, this study can b...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English English |
| Published: |
2015
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| Subjects: | |
| Online Access: | http://etd.uum.edu.my/4626/ |
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| Summary: | The purpose of this study is to examine the pay-performance relationship for Malaysian public listed firms. It is often argued whether executive compensation is positively linked to firm performance and for organizations it is hard to justify their compensation decisions. Therefore, this study can be useful for providing insights on this matter. The first part of this research theoretically examines how executive compensation is determined according to the Human Capital Theory, Agency Theory, and Managerial Power Theory and what the components are of executive compensation packages. Furthermore, it is theoretically examined what the determinants of firm performance are and what role human capital has in determining firm performance. Thereafter, it is empirically investigated by using the
Ordinary Least Squares Regression method whether executive compensation has a positive influence on firm performance while controlling for firm size and industry product as previous studies have found evidence for these being firm performance determinants. The sample of 90 Malaysian public listed firms has been manually
selected based on the availability of information in annual reports regarding
executive compensation. The empirical results have found a positive and significant relationship between executive compensation and firm performance in terms of return on equity. This study makes a significant contribution to the existing literature on the pay-performance relationship for Malaysian firms as little evidence has been found yet |
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