Corporate Governance and Its Impact on Equity Performance

Carmine de Franco, Johann Nicolle, Lan-Anh Tran, Alain Demarolle

2023 | Practitioner | Risk & Performance

Despite its complexity, corporate governance, if properly measured, can help improve value per share for stockholders. The authors found a strong negative relationship between chief executive officer (CEO) compensation and equity performance. A high proportion of CEO compensation in the form of base salary, combined with a relatively low bonus cap, can be an effective means to motivate CEOs.