Asymmetric information phenomenon in the link between CEO pay and firm performance
PurposeThe purpose of this paper is to examine the asymmetric behavior between CEO pay and firm performance in Nigeria.Design/methodology/approachThe study adopts a two step dynamic panel generalized method of moments (GMM) to reveal asymmetric responses of CEO pay to positive and negative shocks in firm performance.FindingsThe research outcomes of a two step dynamic panel GMM) adopted reveal asymmetric responses of CEO pay to positive and negative shocks in firm performance. This implies that CEOs are handsomely compensated for good performance, but not punished for poor performance.Originality/valueThe study, therefore, suggests that CEO pay fails to serve as an internal corporate governance mechanism to alleviate agency problem in Nigeria's listed firms.
Journal of Economic Studies