Honors in Business
Date of Award
Thesis Professor Department
Economics and Finance
Larry White, Susan Hosler
This study investigates the effect the 2008 economic crisis had on the relationship between CEO compensation and firm performance measures for S&P 500 financial companies. The findings assist S&P 500 financial companies to better determine compensation levels for CEOs by accounting for performance as well as account for the most recent valley in the economic cycle. The study uses a database of CEO compensation data for S&P 500 financial firms from both before and after the crisis. The database also contains firm performance data for the respective firms and years. The relationship is explored using separate multiple regression models, then comparing the strength of relationship in 2007-2008 and 2011-2012.
The results find a significant difference in Salary amounts from before and after the crisis. The p-stat and t-stat values the study uses in determining the significance of variables find the only significant variable tested to be the one representing the difference in Salary amounts from before and after the crisis. Compared to other studies on similar topics, Revenues are decidedly less important in the S&P 500 financial sector than they are for other scopes of study as a whole. The study also discovers an alarming disconnect between stock and investor returns and compensation amounts.
Honors Thesis - Open Access
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This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
Smolnycki, Adam, "A Study of the Effect of the 2008 Economic Crisis upon the Relationship between CEO Compensation and Firm Performance Measures." (2013). Undergraduate Honors Theses. Paper 74. https://dc.etsu.edu/honors/74
Copyright by the authors.