The relationship between CEO’ remuneration and firm performance: Evidence from ATX and DAX

• Autor(a) principal: Marzinzik, René
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.8/6711
• topic: Chief Executive Officers’ remuneration; Firm performance; ATX; DAX; Agency theory; Austria; Germany; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

Chief Executive Officers’ (CEO) remuneration became a more discussed topic in the media in recent years as CEOs have, on average, higher remuneration in comparison to the average salary of the company’s employees. On the one hand side, the risk and the responsibility which they bear needs to be valued. With their broad knowledge and experience, they contribute to the overall firm performance and may improve it. On the other hand, with positive performance results and possible raises of the share price, the CEOs can benefit from variable remuneration components in the form of bonuses or share packages of the firm. Our work aims to shed light on the impact of the CEO remuneration on firm performance and vice versa, i.e., the impact of the firm performance on the CEO remuneration and the simultaneous influence. The analysis is done with secondary data of Austrian and German firms listed in the leading share indices ATX (Austrian Traded Index) and DAX (Deutscher Aktienindex), respectively, during the period from 2012 to 2019. CEO remuneration specified into their main components: a fixed and a variable (performance-related) part, is analyzed. Both accounting-based (ROA – Return on Assets, EVA – Economic Value Added) and market-based measures (TQ - Tobin’s Q, TSR – Total Shareholder Return) are used to measure the firm performance. Our key findings of this analysis are that total remuneration and the two accounting-based performance indicators ROA and SEVA, have a simultaneous relationship in Austria. For Germany, we found out that all remuneration components influence ROA significantly positively and that all remuneration components are statistically significantly influenced by ROA. Despite that, we found evidence for a simultaneous relationship between bonus and total remuneration, respectively, and SEVA and TQ. This research contributes to the literature since three perspectives of the relationship are considered; both accounting-based and market-based performance, with two indicators each, are used; and different remuneration components are considered instead of just analyzing total remuneration.