The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies
This study aimed to examine the relationship between the compensation received by chief executive officers (CEOs) and the financial performance of Jordanian public shareholding industrial companies listed on the Amman Stock Exchange (ASE) from 2010 to 2017. To measure the variables of interest, seco...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2020-06-01
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| Series: | Investment Management & Financial Innovations |
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| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13680/IMFI_2020_02_Khaled.pdf |
| _version_ | 1823998714152222720 |
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| author | Marie H. Bani Khaled |
| author_facet | Marie H. Bani Khaled |
| author_sort | Marie H. Bani Khaled |
| collection | DOAJ |
| description | This study aimed to examine the relationship between the compensation received by chief executive officers (CEOs) and the financial performance of Jordanian public shareholding industrial companies listed on the Amman Stock Exchange (ASE) from 2010 to 2017. To measure the variables of interest, secondary data published on the ASE website were processed to become preliminary data suitable for the study. The study population consisted of 56 companies, 25 of which met the inclusion criteria. The results of the analysis of the data on these 25 companies revealed a large difference between the amount of financial compensation received by CEOs and the earnings per share (EPS) received by shareholders. The results also showed a statistically positive and significant relationship between the amount of CEO compensation and the financial performance of industrial companies. Furthermore, return on assets (ROA), EPS, and leverage have a statistically negative and significant relationship with financial performance. However, the net profit margin has a statistically positive and significant relationship with financial performance. Besides, the results showed a positive and significant relationship between the age of the CEO and the amount of compensation received. On the other hand, Tobin’s Q model demonstrated that the relationship between CEO duality and the amount of CEO compensation is not statistically significant. Therefore, the study recommends using more than one type of compensation for the CEOs of public shareholding industrial companies in Jordan and that CEO compensation should be related to financial performance. |
| first_indexed | 2024-12-18T17:33:38Z |
| format | Article |
| id | doaj.art-51d979b434a0476290078bcbd93a052e |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-12-18T17:33:38Z |
| publishDate | 2020-06-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-51d979b434a0476290078bcbd93a052e2022-12-21T20:59:24ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582020-06-0117224025410.21511/imfi.17(2).2020.1913680The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companiesMarie H. Bani Khaled0https://orcid.org/0000-0002-4083-3088Ph.D., Department of Business Administration, Faculty of Finance and Business Administration, Al al-Bayt UniversityThis study aimed to examine the relationship between the compensation received by chief executive officers (CEOs) and the financial performance of Jordanian public shareholding industrial companies listed on the Amman Stock Exchange (ASE) from 2010 to 2017. To measure the variables of interest, secondary data published on the ASE website were processed to become preliminary data suitable for the study. The study population consisted of 56 companies, 25 of which met the inclusion criteria. The results of the analysis of the data on these 25 companies revealed a large difference between the amount of financial compensation received by CEOs and the earnings per share (EPS) received by shareholders. The results also showed a statistically positive and significant relationship between the amount of CEO compensation and the financial performance of industrial companies. Furthermore, return on assets (ROA), EPS, and leverage have a statistically negative and significant relationship with financial performance. However, the net profit margin has a statistically positive and significant relationship with financial performance. Besides, the results showed a positive and significant relationship between the age of the CEO and the amount of compensation received. On the other hand, Tobin’s Q model demonstrated that the relationship between CEO duality and the amount of CEO compensation is not statistically significant. Therefore, the study recommends using more than one type of compensation for the CEOs of public shareholding industrial companies in Jordan and that CEO compensation should be related to financial performance.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13680/IMFI_2020_02_Khaled.pdfCEO compensationfinancial performancefinancial ratiosJordanian public shareholding industrial companies |
| spellingShingle | Marie H. Bani Khaled The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies Investment Management & Financial Innovations CEO compensation financial performance financial ratios Jordanian public shareholding industrial companies |
| title | The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies |
| title_full | The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies |
| title_fullStr | The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies |
| title_full_unstemmed | The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies |
| title_short | The relationship between CEO compensation and financial performance in Jordanian public shareholding industrial companies |
| title_sort | relationship between ceo compensation and financial performance in jordanian public shareholding industrial companies |
| topic | CEO compensation financial performance financial ratios Jordanian public shareholding industrial companies |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13680/IMFI_2020_02_Khaled.pdf |
| work_keys_str_mv | AT mariehbanikhaled therelationshipbetweenceocompensationandfinancialperformanceinjordanianpublicshareholdingindustrialcompanies AT mariehbanikhaled relationshipbetweenceocompensationandfinancialperformanceinjordanianpublicshareholdingindustrialcompanies |