A Canonical Correlation Analysis of CEO Compensation and Corporate Performance in the Service Industry

Document Type

Peer-Reviewed Article

Publication Date



This paper attempts to examine a canonical (simultaneous) relationship between service industry CEOs' compensation and corporate performance with respect to accounting-based and market-based performance measures. In addition, this study examines the effect of firm size on compensation. The results of this study suggest that executive compensation depends simultaneously on both market-based and accounting-based performance measures. EPS, ROA, ROE and Market Rate of Return are positively associated with both cash compensation and long-term compensation. Firm size is also positively related to the long-term compensation.