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Executive Compensation Incentives in a Volatile Market

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  • Miles B. Cahill
  • Alaina C. George

Abstract

Recent literature has been conflicted as to whether executive compensation schemes have significant incentive pay elements. The most well-known study supporting the existence of pay-for-performance used data corresponding to the recent bull market of the 1990s. This paper estimates a similar model of incentive pay using data from more recent volatile markets of 1999–2001, and finds that the incentive component of executive pay has at least diminished, and has perhaps reversed. Thus, incentive pay may be something of a “fair weather†phenomenon.

Suggested Citation

  • Miles B. Cahill & Alaina C. George, 2005. "Executive Compensation Incentives in a Volatile Market," The American Economist, Sage Publications, vol. 49(2), pages 33-43, October.
    • Handle: RePEc:sae:amerec:v:49:y:2005:i:2:p:33-43
    DOI: 10.1177/056943450504900204
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    References listed on IDEAS

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    Cited by:

    1. Owen P. Hall Jr. & Kenneth Ko, 2014. "Determinates of Executive Compensation: A Hierarchical Linear Modeling Approach," International Journal of Knowledge-Based Organizations (IJKBO), IGI Global, vol. 4(2), pages 53-63, April.

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