CEO COMPENSATION AND FIRM PERFORMANCE: NONLINEARITY AND ASYMMETRY

Abstract

The study examined the relationship between CEO compensation and firm financial performance of listed oil and gas companies in Nigeria. The study was conducted for a period from 2011 to 2021. The study adopted an Ex-post facto research design. The ex-post facto research design was used because the study relied heavily on already existing secondary data of all listed oil and gas companies in Nigeria. The population of the study was all the twelve (12) oil and gas companies listed on the floor of the Nigerian Stock Exchange (NSE, 2021). The sample size of the study was eight (8) oil and gas companies listed on the Nigeria stock exchange. Based on the short-run effect, the results revealed that during the favourable period, CEO remuneration Pay-out has a positive and significant association with the firm financial performance of listed oil and gas companies in Nigeria. Also, the results revealed that during the period positive outcome, CEO Dividend has a negative and a significant relationship with the firm financial performance of listed oil and gas companies in Nigeria. Finally, in the short run, the results revealed that during the favourable period, CEO Stock has a negative and significant with the firm financial performance of listed oil and gas companies in Nigeria. the study concluded based on the asymmetry results that CEO compensation has a significant effect on the financial performance of listed oil and gas companies in Nigeria. On the basis of the findings and the conclusion made above, the study recommends that: The oil and gas companies should always consider the asymmetric effect of CEO compensation in determining the kind of incentives to be given to the CEOs