Executive compensation, management turnover, and firm performance. An empirical investigation

Anne T. Coughlan*, Ronald M. Schmidt

*Corresponding author for this work

Research output: Contribution to journalArticle

574 Scopus citations

Abstract

This paper investigates the internal managerial control mechanisms at the disposal of a corporation's compensation-setting board or committee. The hypotheses tested are that both compensation changes and management changes are methods used to control top management, and that the use of these control methods is motivated by changes in the firm's stock price performance. Public data from the period 1977-1980 support our hypotheses. We conclude that the firm's board creates managerial incentives consistent with those of the firm's owners, both by setting compensation and following management change policies which benefit shareholders.

Original languageEnglish (US)
Pages (from-to)43-66
Number of pages24
JournalJournal of Accounting and Economics
Volume7
Issue number1-3
DOIs
StatePublished - Jan 1 1985

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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