Executive Compensation and Insurance Sector Performance: Evidence from Nigeria

Authors

  • Osaretin Kayode Omoregie Lagos Business School
  • Ikechukwu Kelikume Lagos Business School

Abstract

This study investigates how six different measures of firm performance affect executive compensation in Nigerian insurance sector (2011-2016). The Im, Pesaran and Shin (IPS) and Kao Residual tests were employed to ascertain stationarity and cointegration of the variables. Mixed stationary and no cointegration were observed. The results indicate that profitability variables (return on asset, return on equity and net profit margin) are insignificant to executive compensation while efficiency variables are significant to executive compensation. That is profitability variables does not have significant effect on executive compensation while corporate performance measured by efficiency variables have effect on executive compensation. It is recommended that the board should focus on efficiency measures in setting executive compensation levels as these ultimately drive profitability and corporate performance in the insurance sector. This study make a meaningful contribution to the literature as very little work has been done in this area.

Keywords: Executive Compensation, Insurance Sector Performance, Solvency Ratio, Combined Operating Ratio, Loss Ratio

JEL Classifications: J31; J32; J33; M53

DOI: https://doi.org/10.32479/ijefi.7577

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Author Biographies

Osaretin Kayode Omoregie, Lagos Business School

Osaretin Kayode Omoregie is a Senior Faculty at the Department of Finance and Strategy at the Lagos Business School. His research areas include ethics in financial decisions, corporate financial intelligence and performance, executive compensation and corporate performance, evaluation of SME credit default risk and financing absorptive capacity, multi-creditor resolution of corporate insolvency and financial strategy and policy analysis. He has published extensively in academic and professional journals in these areas, and presented papers in local and international academic and professional conferences.

Ikechukwu Kelikume, Lagos Business School

Ikeis a Senior Faculty in the Department of Economics at Lagos Business School. He undertakes research and consults in areas which include macroeconomic modeling, financial and monetary economics as well as econometrics and quantitative method in economics.

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Published

2019-03-20

How to Cite

Omoregie, O. K., & Kelikume, I. (2019). Executive Compensation and Insurance Sector Performance: Evidence from Nigeria. International Journal of Economics and Financial Issues, 9(2), 277–283. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/7577

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