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Swiss Journal of Economics and Statistics

Table 5 Logit regression of RPE usage in executive compensation contracts

From: Preaching water but drinking wine? Relative performance evaluation in international banking

Independent variables

Industry peer group

Industry/size peer group

Intercept

− 25.31

− 25.37

 

(0.13)

(0.13)

Compensation

0.48

0.47

 

(0.37)

(0.38)

Firm perf

0.01

− 0.24

 

(0.99)

(0.78)

Peer return (industry)

0.08

 
 

(0.96)

 

Peer return (industry/size)

 

0.79

  

(0.55)

Firm size (sales)

2.71***

2.70***

 

(0.00)

(0.00)

Growth options

− 19.90*

− 19.82*

 

(0.09)

(0.10)

Year dummies

Yes

Yes

Industry dummies

Yes

Yes

Country dummies

Yes

Yes

R 2

52.56%

52.62%

Number of observations

335

335

  1. Note: This Table documents logit regression results for the equation yit=γ0+γ1·Compit+γ2·FirmPerfit+γ3·PeerPerfit+γ4·Cit+uit. The dependent variable is RPE, an indicator variable which is equal to 1 if the firm discloses peer group use in the compensation contracts. We regress RPE on firm performance, peer returns, firm size, and growth options for 335 firm-year observations over the time span 2004–2013. We also include year, country, and industry dummies in the regression estimation for two specifications, industry and industry/size peers. We report Cox and Snell’s R2 and model coefficient estimates. Significance levels are denoted as follows: 1% (∗∗∗), 5% (∗∗), and 10% (∗). The corresponding p values are reported in parentheses below each coefficient estimate
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