Executive compensation plays an important role in solving the agency
problem in a firm and in maximizing firm value. However, empirical
studies on the impact of such compensation on firm performance do
not reach unanimous conclusions. Some researchers find a positive
effect of executive compensation on firm performance, considered as
either market or accounting performance, while others find a negativeeffect. Therefore, it is important to identify possible reasons for these
inconsistent results and to reconcile these research findings.