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  5. CEO Pay-For-Performance Heterogeneity: Examples Using Quantile Regression

CEO Pay-For-Performance Heterogeneity: Examples Using Quantile Regression

File(s)
Hallock12_CEO_Pay_for_Performance.pdf (918.35 KB)
Permanent Link(s)
https://hdl.handle.net/1813/75345
Collections
ILR Articles and Chapters
Faculty Publications - Human Resource Studies
Author
Hallock, Kevin F.
Madalozzo, Regina
Reck, Clayton G.
Abstract

We provide some examples of how quantile regression can be used to investigate heterogeneity in pay–firm size and pay-performance relationships for U.S. CEOs. For example, do conditionally (predicted) high-wage managers have a stronger relationship between pay and performance than conditionally low-wage managers? Our results using data over a decade show, for some standard specifications, there is considerable heterogeneity in the returns to firm performance across the conditional distribution of wages. Quantile regression adds substantially to our understanding of the pay-performance relationship. This heterogeneity is masked when using more standard empirical techniques.

Date Issued
2008-07-29
Keywords
executive compensation
•
quantile regression
•
pay and performance
Rights
Required Publisher Statement: The final paper is forthcoming in Financial Review, published by Iowa State University.
Type
article

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