Executive compensation, risk and performance of UK listed firms.
I investigate whether higher executive compensation is related to riskier corporate decision in UK firms incorporating an additional measure of compensation referred to as Total wealth. CEO’s total wealth represents the accumulated equity linked compensation, which had already been received by CEOs over the years in the firm; this variable has not be considered due to unavailability of data. It is important to measure total wealth because executives will have greater incentive to ensure that the value of their accumulated equity earnings (total wealth) over time goes up and could therefore take more risk. CEO’s total wealth represents the accumulated equity linked compensation, which had already been received by CEOs over the years in the firm. This variable has not be considered due to unavailability of data. Furthermore, I relate the compensation-risk-relationship to performance focusing on an indirect relationship between compensation and performance against a direct relationship tested in previous researches. This approach might help explain the divergence results from previous studies. This is based on the idea that compensation increases firm performance because compensation increases risk taking. Finally, I am working currently working on the impact of UK government rescue plan on banks performance with particular focus on nationalization of UK banks during the financial crisis of 2008. Since the government bailout of banks during the financial crisis of 2008, various studies have be conducted on the financial crisis focusing on the government bailout of the financial sector. However, these studies focused on the US government bailout. Given the significance of the crisis and the severity of its effects particularly on the financial sector in UK. It is important to ascertain the effectiveness of the UK rescue plan as well.
1st Supervisor: Professor Gulnur Muradoglu2nd Supervisor: Dr. Deven Bathia