Authors: Rim Ben Hassen
Addresses: ISG, University of Tunis, Tunisia
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.
Keywords: excessive compensation; corporate performance; family firms; family businesses; France; CEO compensation; firm performance; executive pay; private benefits; minority shareholders; agency costs.
Afro-Asian Journal of Finance and Accounting, 2014 Vol.4 No.4, pp.387 - 407
Available online: 20 Jan 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article