Title page for ETD etd-5312182239721111


Type of Document Dissertation
Author Lobingier, Patricia Graybeal
URN etd-5312182239721111
Title Compensation Choice - The Effect on Firm Performance: An Interindustry Look at Performance Plans and Restricted Stock
Degree PhD
Department Business (Accounting)
Advisory Committee
Advisor Name Title
Easterwood, Cintia M.
Haynes, Christine M.
Kumar, Raman
Richardson, Frederick M.
Brown, Robert M. Committee Chair
Keywords
  • performance plans
  • restricted stock
  • executive compensation
Date of Defense 1997-03-24
Availability unrestricted
Abstract
Public criticism of

executive pay has increased significantly in

recent years. Shareholders express concern

that the level of pay to many executives does

not match the level of increase in shareholder

wealth. The government has even gotten

involved in the issue by changing tax laws

related to compensation and taking an interest

in how compensation is recorded in financial

statements. This study investigates the

relationship between adoption of

compensation components and improved firm

performance. Specifically, performance and

restricted stock plan adoptions are analyzed

for nine industries. Variable change is analyzed

pre and post adoption for adopters; these

adopters are then compared to non-adopters

and to non-adopting peers. Data were

gathered from COMPUSTAT and analyzed

using four statistical methods; t-tests, analysis

of variance, multivariate analysis of variance

and analysis of means. The study covers 20

years of adoptions and involves 335 adopting

firms. Results of the study indicate that, when

solely analyzing adopters, adoptions of

performance or restricted stock plans improve

firm performance for some industries but not

for others. The study further indicates for most

industry groups, the improvement experienced

by adopters is not as significant as the

improvement realized by the non-adopting

segment of the industry. Lastly, when adopters

are compared to non-adopting peers the study

finds peers perform as well as or better than

adopters. These results imply adoption of

restricted stock plans works as intended for

some industries by improving firm performance

but may not improve performance to the levels

reached by the industry as a whole.

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