Corporate Diversification and CEO Compensation: Evidence from the Moderating Effect of Firm Size

Hwei C Wang; chih c fang; Yung-I Lou; Randall Zhaohui Xu; Ya Ying Chou Yeh

doi:10.31966/jabminternational.v29i2.854

Hwei C Wang University of Maryland Eastern Shore http://orcid.org/0000-0001-6677-0938
chih c fang Morgan State University http://orcid.org/0000-0002-8522-4569
Yung-I Lou Providence University http://orcid.org/0000-0001-8204-0345
Randall Zhaohui Xu University of Houston Clear Lake http://orcid.org/0000-0002-6228-2336
Ya Ying Chou Yeh Framingham State University

DOI: https://doi.org/10.31966/jabminternational.v29i2.854

Abstract

This study explores whether firm size moderates the relationship between corporate diversification and CEO compensation. A sample of 2,448 CEO compensations across 1,622 firms from 1997 to 2002 was used to test several hypotheses. Corporate diversification was divided into two categories (international diversification and industry diversification) and firm size was defined using total assets.

This study uses firm size as the moderator to test whether firm size influences the relationship between international diversification and CEO compensation. This study found new evidence that firm size moderate the relationship between both international diversification and industrial diversification and CEO total compensation.

The result shows that firm size significantly and positively influences the relationship between International diversification and CEO compensation. Furthermore, the finding also shows that firm size significantly and negatively influences the relationship between industrial diversification and CEO compensation.

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Author Biographies

Hwei C Wang, University of Maryland Eastern Shore

Dr. Hwei Cheng Wang, CPA is an Associate Professor of University of Maryland Eastern Shore, she can be reached at Department of Business, Management and Accounting, EASC #2062, Princess Anne, MD 21853, USA ; wwang@umes.edu Tel: 410-651-7719

chih c fang, Morgan State University

Chih Chi Fang is a PhD Student in Business Administration - Concentration in Accounting at Morgan State University, he can be reached at accounting department of the Earl G. Graves School of Business and Management (SBM), chfan4@morgan.edu, Tel: 443-373-9198

Yung-I Lou, Providence University

Dr. Yung-I Lou, CPA is an Associate Professor of Providence University, she can be reached at Department of Accounting, 200, Sec. 7, Taiwan Boulevard, Salu, Taichung 43301, Taiwan, yilou@pu.edu.tw Tel: +886426328001 Ext.13225

Randall Zhaohui Xu, University of Houston Clear Lake

Dr. Randall Zhaohui Xu, CPA is a Professor of University of Houston at Clear Lake, he can be reached at Accounting department, Bayou Building, Suite 3237, Room 6, Bay Area Boulevard, Houston, TX 77058

xuzhao@uhcl.edu Tel: 281-283-3145

Ya Ying Chou Yeh, Framingham State University

Dr. Ya Ying Chou Yeh, CPA is an Associate Professor of Framingham State University, she can be reached at The Department of Accounting, Economics, and Finance, Crocker Hall 204, 100 State Street, Framingham, MA 01701-9101; yyeh@framingham.edu Tel: 508.215.5786