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Efficiency Persistence of Bank and Thrift CEOs Using Data Envelopment Analysis

In: Data Envelopment Analysis

Author

Listed:
  • Yao Chen

    (Nanjing Audit University
    University of Massachusetts at Lowell)

  • Greg N. Gregoriou

    (State University of New York (Plattsburgh))

  • Fabrice Douglas Rouah

    (McGill University)

Abstract

We examine the performance of chief executive officers (CEOs) of U.S. banks and thrifts. We apply Data Envelopment Analysis (DEA) to measure the performance of CEOs on a yearly basis over the 1997–2004 period, and find evidence that best-practice CEOs who have a DEA efficiency score of one are rewarded with higher compensation compared to under-performing CEOs who have a DEA efficiency score greater than one. We find DEA efficiency score to be a highly significant predictor of CEO compensation, even after adjusting for firm size. In addition, we find that DEA efficiency scores of CEOs have decreased over the observation period. We also find that best-practice CEOs tend to be persistent on a yearly basis, but we find little evidence of multi-period persistence. The results of this study can serve as a benchmark for CEOs wishing to evaluate their performance relative to their peers, and as a new measure of CEO performance.

Suggested Citation

  • Yao Chen & Greg N. Gregoriou & Fabrice Douglas Rouah, 2016. "Efficiency Persistence of Bank and Thrift CEOs Using Data Envelopment Analysis," International Series in Operations Research & Management Science, in: Joe Zhu (ed.), Data Envelopment Analysis, chapter 0, pages 1-16, Springer.
    • Handle: RePEc:spr:isochp:978-1-4899-7684-0_1
    DOI: 10.1007/978-1-4899-7684-0_1
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    Cited by:

    1. Jill Johnes & Swati Virmani, 2020. "Chief executive pay in UK higher education: the role of university performance," Annals of Operations Research, Springer, vol. 288(2), pages 547-576, May.

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