| dc.description.abstract | This paper investigates the impact of CEO compensation, including total compensation, variable pay, and base salary, on key firm performance indicators such as Return on Assets (ROA) and Return on Sales (ROS). Despite numerous studies on the relationship between CEO compensation and firm performance in various countries, the research on Norwegian firms remains limited. Therefore, to contribute to the knowledge in this field, our analysis uses a dataset comprising 85 Norwegian companies listed on the Oslo Stock Exchange (OSE) from 2015 to 2022.
The ordinary least squares (OLS) regression analysis results provide compelling evidence of a positive and statistically significant relationship between CEO variable pay, encompassing both short-term and long-term incentives, and firm performance. However, our analysis did not identify any empirical support for the influence of CEO total compensation or CEO base salary on firm performance. Moreover, our findings suggest that factors such as firm size, age, and leverage affect firm performance, depending on the specific measure of performance being used. The consistent negative and highly significant relationship between firm age and ROS is particularly noteworthy, indicating lower performance for older firms. This result calls for additional investigations to understand better the underlying factors contributing to this relationship and draw more conclusive insights | en_US |
