Title: The effect of firm performance on executive compensation in socially responsible firms: the Indian evidence

Authors: Chetna Rath; Malabika Deo

Addresses: T A Pai Management Institute, Manipal Academy of Higher Education, Manipal, 576104, India ' Department of Commerce, School of Management, Pondicherry University, Puducherry, 605014, India

Abstract: The purpose of this paper is to examine the pay-performance sensitivity in the case of socially responsible companies and test whether all the performance measures have a consistent impact across firms having different pay scales. Taking NSE Nifty 100 ESG Index as the data sample, a panel of 69 firms for 2014-2019 has been analysed using two-step system GMM and the quantile regression with panel data (QRPD) model after sample splits. The findings reveal that accounting-based firm performance indicators are more significant than the market-based measures affecting remuneration. Moreover, pay-performance sensitivity is more visible in firms paying lesser compensation, and public/private ownership status also plays a significant role in determining executive pay. Our findings are helpful to policymakers as it stresses the determinants of pay-performance sensitivity across various pay-quantiles in ESG firms.

Keywords: executive compensation; firm performance; India; socially responsible companies; performance-pay sensitivity; ESG firms.

DOI: 10.1504/IJICBM.2023.131444

International Journal of Indian Culture and Business Management, 2023 Vol.29 No.2, pp.200 - 220

Received: 26 Aug 2021
Accepted: 13 Feb 2022

Published online: 13 Jun 2023 *

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