CEO compensation and bank efficiency: an application of conditional nonparametric frontiers

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Matousek, Roman and Tzeremes, Nickolaos G. (2016) CEO compensation and bank efficiency: an application of conditional nonparametric frontiers. European Journal of Operational Research, 251 (1). pp. 264-273. ISSN 0377-2217

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Abstract

The paper investigates in a dynamic context the effect of Chief Executive Officer (CEO) bonus and salary payments on banks’ technical efficiency levels. Our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by Bădin et al. (2012). We apply time-dependent conditional efficiency estimates to analyse a sample of 37 US banks for the period from 2003 to 2012. The empirical evidence reveals a non-linear relationship between CEO bonus and salary payments and banks’ efficiency levels. More specifically it is reported that salary and bonus payments affect differently banks’ technological change and technological catch-up levels. Finally, the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels.

Item Type: Article
RIS ID: https://nottingham-repository.worktribe.com/output/789868
Keywords: Bank efficiency; CEO compensation; Conditional efficiency measures; Data envelopment analysis
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1016/j.ejor.2015.10.035
Depositing User: Eprints, Support
Date Deposited: 09 May 2018 09:45
Last Modified: 04 May 2020 17:51
URI: https://eprints.nottingham.ac.uk/id/eprint/51645

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