Non‐parametric assessment of CEO compensation practices

Abstract

Purpose The purpose of this research is to present an alternative to the vast majority of studies on chief executive officer (CEO) compensation practices in the USA which have relied on multiple regression analysis and its variants. Design/methodology/approach The paper points out the shortcomings of traditional parametric approaches (such as regression analysis) to the analysis of CEO compensation practices and suggest non‐parametric alternatives. Findings Using tests for concurrent validity, the paper demonstrates how non‐parametric assessment may be successfully applied to the analysis of CEO compensation practices. Originality/value Because of the novelty of this approach, the findings should be of value to those academics and practitioners interested in the evaluation of CEO compensation practices.