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CEO compensation and bank efficiency: an application of conditional nonparametric frontiers

Matousek, Roman; Tzeremes, Nickolaos G.


Roman Matousek

Nickolaos G. Tzeremes


The paper investigates in a dynamic context the effect of Chief Executive Officer (CEO) bonus and salary payments on banks’ technical efficiency levels. Our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by Bădin et al. (2012). We apply time-dependent conditional efficiency estimates to analyse a sample of 37 US banks for the period from 2003 to 2012. The empirical evidence reveals a non-linear relationship between CEO bonus and salary payments and banks’ efficiency levels. More specifically it is reported that salary and bonus payments affect differently banks’ technological change and technological catch-up levels. Finally, the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels.


Matousek, R., & Tzeremes, N. G. (2016). CEO compensation and bank efficiency: an application of conditional nonparametric frontiers. European Journal of Operational Research, 251(1),

Journal Article Type Article
Acceptance Date Oct 19, 2015
Online Publication Date Oct 30, 2015
Publication Date May 16, 2016
Deposit Date May 9, 2018
Publicly Available Date May 9, 2018
Journal European Journal of Operational Research
Print ISSN 0377-2217
Electronic ISSN 0377-2217
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 251
Issue 1
Keywords Bank efficiency; CEO compensation; Conditional efficiency measures; Data envelopment analysis
Public URL
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