RISK AND EXECUTIVES COMPENSATION: AN INDUSTRY-WISE ANALYSIS OF PAKISTAN NON-FINANCIAL SECTORS

Abstract

Large compensation packages, according to critics, pushed managers to take unwarranted risks, which ultimately contributed to the financial crisis. This study explores the relationship between systematic risk and executive remuneration. For investigation, this study uses the data of 170 non-financial listed firms of the Pakistan Stock Exchange. Further, this study divides the data into the 5 majors listed sectors and explores the relationship between investigated variables. The estimation method used in this study is OLS. Results suggest that executive remuneration effect differently on systematic risk in different sectors of Pakistan. Important determinants for systematic risk return on assets, firm size, firm age, and TbinQ. In the context of Pakistan, this study contributes to the literature. Policymakers can use this study's findings for decisions making.