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A Structural Equation Modeling of CEO Pay-Performance Relationships

Directory : Faculty : Intellectual Contributions

Intellectual Contribution by Frederick Choo

Contribution Title

A Structural Equation Modeling of CEO Pay-Performance Relationships

Publication

The Journal of American Academy of Business, Cambridge

Co-author

Kim Tan

Year

2004

Description

Previous CEO pay-performance research found a contemporaneous relationship between CEO pay and firm performance. We extended this contemporaneous relatioship into its synchronous and lagged causal relationships by using structural equation modeling (SEM) to analyze (1) the direction of causality between pay and performance, (2) the effect of prior pay on future pay, and (3) the effect of prior performance on future performance.

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