What determines CEO compensation in retail banks? : A comparative study in Sweden and the UK following the financial crisis

• Main Authors: Peterzén, Didrik, Davidsson, Anja
• Format: Others
• Language: English
• Published: Internationella Handelshögskolan, Högskolan i Jönköping, IHH, Företagsekonomi 2019
• Subjects: Corporate governance; CEO compensation; Financial Crisis; Retail banks.; Business Administration; Företagsekonomi
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-43807

Abstract Background: Following the financial crisis in 2008, a debate concerning excessive compensation of CEOs in retail banks arose. Previous studies have examined the association between CEO compensation and different factors namely, firm performance, board characteristics and firm size. Although the literature regarding the impact of the financial crisis and government intervention on CEO compensation is still to be empirically explored.   Purpose: To examine if the determinants of CEO compensation in retail banks have changed following the 2008 financial crisis and to determine if government intervention of retail bank have influenced the CEO compensation.   Method:  To achieve the purpose, the thesis takes on a deductive, quantitative research approach through the use of a multiple linear regression model. The multiple regression implements previously established determinants of executive compensation (Randoy & Nielsen, 2002). The regressions use accounting- and non-financial data that is collected from annual reports published by a sample of eight retail banks listed on the Stockholm- and London Stock Exchange over 16 years between 2002-2017.   Conclusion: The thesis finds that the financial crisis had little impact on the determinants of the CEO compensation. Although, the thesis is able to conclude that the government intervention of the retail banks in Sweden and United Kingdom follow the expectations stated beforehand, since the result show that the compensation of the CEO is reduced in those banks affected by government intervention.