Determints of CEO Bonus Compensation

Abstract The primary purpose of this study is to explore the determinants CEO bonus compensation: examine bonuses and whether or not independent variables are associated with compensation. For purposes study, a sample 2,448 compensations across 1,622 firms from 1997 2002 was used test several hypotheses. dependent variable in model Bonus dollar value (cash non-cash) earned by named executive officer during fiscal year. Corporate diversification divided into two categories; international industry diversification. Firm performance measured both Market-based, Performance (RET) Accounting-based, (ACE). results show that higher degree diversification, accounting earnings performance, more CEOs receive bonuses. In addition, found greater use reliance on accounting-based, rather than market-based measures firm performance. also demonstrated investment opportunities will fewer larger smaller firms.