Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1018505 | Journal of Business Research | 2011 | 7 Pages |
Abstract
We investigate the relationship between firm strategy and the use of performance measures in executive compensation. Our analysis shows that there is an increased emphasis on sales in the determination of executive compensation for firms pursuing a cost leadership strategy, which seek to achieve their competitive advantage through low price and high volume. In contrast, there is a decreased emphasis on accounting measures in firms pursuing a differentiation strategy, which require investments in brand recognition and innovative products, investments that are subject to unfavorable accounting treatment. These results indicate that compensation committees link executive rewards to firm strategy.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Steven Balsam, Guy D. Fernando, Arindam Tripathy,