Ownership concentration and sensitivity of executive pay to accounting performance measures: Evidence from publicly and privately-held insurance companies

Citation
B. Ke et al., Ownership concentration and sensitivity of executive pay to accounting performance measures: Evidence from publicly and privately-held insurance companies, J ACCOUNT E, 28(2), 1999, pp. 185-209
Citations number
45
Categorie Soggetti
Economics
Journal title
JOURNAL OF ACCOUNTING & ECONOMICS
ISSN journal
01654101 → ACNP
Volume
28
Issue
2
Year of publication
1999
Pages
185 - 209
Database
ISI
SICI code
0165-4101(199912)28:2<185:OCASOE>2.0.ZU;2-N
Abstract
We investigate the relation between CEO compensation and accounting perform ance measures as a function of ownership structure. We use publicly-held pr operty-liability insurers to consider the relation for firms with diffusely -held ownership and use privately-held property-liability insurers to consi der the relation for firms with closely-held ownership. We find a significa nt positive association between return on assets and the level of compensat ion for publicly-held insurers. Consistent with optimal contracting theory, we find no such relationship for privately-held insurers. Results suggest that within closely-held firms CEO compensation is less based on objective measures like accounting information and more on subjective measures. (C) 1 999 Elsevier Science B.V. All rights reserved.