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Efficiency Persistence of Bank and Thrift CEOs Using Data Envelopment Analysis

  • Yao ChenEmail author
  • Greg N. Gregoriou
  • Fabrice Douglas Rouah
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 238)

Abstract

We examine the performance of chief executive officers (CEOs) of U.S. banks and thrifts. We apply Data Envelopment Analysis (DEA) to measure the performance of CEOs on a yearly basis over the 1997–2004 period, and find evidence that best-practice CEOs who have a DEA efficiency score of one are rewarded with higher compensation compared to under-performing CEOs who have a DEA efficiency score greater than one. We find DEA efficiency score to be a highly significant predictor of CEO compensation, even after adjusting for firm size. In addition, we find that DEA efficiency scores of CEOs have decreased over the observation period. We also find that best-practice CEOs tend to be persistent on a yearly basis, but we find little evidence of multi-period persistence. The results of this study can serve as a benchmark for CEOs wishing to evaluate their performance relative to their peers, and as a new measure of CEO performance.

Keywords

Chief executive officers (CEOs) Data envelopment analysis (DEA) Performance Compensation Thrifts 

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Yao Chen
    • 1
    • 2
    Email author
  • Greg N. Gregoriou
    • 3
  • Fabrice Douglas Rouah
    • 4
  1. 1.International Center for Auditing and EvaluationNanjing Audit UniversityNanjingPeople’s Republic of China
  2. 2.Manning School of BusinessUniversity of Massachusetts at LowellLowellUSA
  3. 3.School of Business and EconomicsState University of New York (Plattsburgh)PlattsburghUSA
  4. 4.Desautels Faculty of ManagementMcGill UniversityMontrealCanada

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