Is innovativeness a link between pay and performance?

Research output: Journal article publicationJournal articleAcademic researchpeer-review

6 Citations (Scopus)


The relationship between innovativeness and pay-performance sensitivity is theoretically ambiguous because innovative activities simultaneously enhance the productivity of executives in creating shareholder value (productivity effect) and increase the volatility of the firm's performance (volatility effect). The empirical findings from the pooled sample suggest that innovativeness and executive pay-performance sensitivity are inversely related. The extent to which the volatility effect outweighed the productivity effect was especially pronounced during the 2000-2003 market crash period. While the productivity effect is stronger than the volatility effect in both the CEO and low-free-cash-flow subsamples, the volatility effect is stronger than the productivity effect in both the non-CEO and high-free-cash-flow subsamples.
Original languageEnglish
Pages (from-to)411-429
Number of pages19
JournalFinancial Management
Issue number2
Publication statusPublished - 1 Jun 2009

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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