CEO COMPENSATION, CASHFLOW FROM OPERATING ACTIVITIES AND STOCK RETURNS IN NIGERIA
Abstract
The objective of the study is to examine the effect of CEO compensation and cash flow from operating activities on stock returns among quoted banks in Nigeria. To achieve this objective, a model was specified and estimated. The variables used in the model are: Stock Returns (SR) as the dependent variable, independent variables include: CEO compensation (CEOCOMP), cash flow from operations activities (CFO), Firm’s Age (FAGE), Firm’s size (FSIZE), and Leverage (LEV). Descriptive statistics, correlation analysis, and fixed and random effect techniques of panel data estimation were used to analyze the data set from year 2012 to 2022 financial year. The findings show that firm size, CEO compensation are perceived to have deleterious effects on stock returns. The study also finds that CEO compensation has extensive negative effects on stock returns in the short run. Therefore, the study suggests that policies to stabilize the operations of the stock market as well as standardize CEO compensation should be maximized to help facilitate appropriate earnings to increase shareholders’ wealth with no deception of any fictitious increase in income.