Excessive CEO compensation and performance in French family firms
by Rim Ben Hassen
Afro-Asian J. of Finance and Accounting (AAJFA), Vol. 4, No. 4, 2014

Abstract: The purpose of this paper is to examine the effects of CEO compensation on firm performance of French family firms. To investigate the link between executive pay and firm performance, we used multiple regression method over a period of four years (2007 to 2010). Our results show that French family companies provide excessive compensation compared to their non-family counterparts, suggesting that families are likely to extract private benefits at the expense of minority shareholders. The findings also show that excess remuneration paid to executives has a negative impact on financial performance. This result confirms the preceding one and suggests that CEO compensation is used by families as a tunnelling mechanism that exacerbates agency costs.

Online publication date: Sat, 31-Jan-2015

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