Firm Performance, Corporate Governance and Managerial Reward

The aim of the paper is to test two hypotheses: on one hand, the aim is to analyse if firm’s executive rewards can be explained just by the hierarchical structure of the firm (Model One) while on the other we want to study the correlation between the level of Chief Executive Officer (CEO) compensation, the quality of firms’ corporate governance and firm performances (Model Two). A comparison of the results obtained will be helpful for two reasons: if the level of reward is not only a function of hierarchy (Model One) or economic performances (Model Two) it will be interesting to compare the excess of compensation due to managerial discretion obtained in the two models and check if the results obtained show a similar trend. Furthermore, if the excess of compensation due to managerial discretion will be positive, model two will help us to understand if this “inefficiency” is due to a weak corporate governance structure or to the nature of the ownership of the firm