CEO-CFO tournament incentives and its relationship to the performance of JSE-listed companies

Abstract

This study aimed to determine a relationship between the Chief Executive Officer ( CEO) to Chief Financial Officer (CFO) - CEO-CFO tournament incentives and the performance of Johannesburg Stock Exchange (JSE) listed companies. It used simple random sampling AND resulted with a sample of 76 JSE-listed companies. The period under consideration of the data is 10 years from 2014 to 2023. After linear regression statistical analysis, the research found a significant negative relationship between CEO-CFO tournament incentives and company performance when using ROE as a measure of performance. The relationship is weak for both cases when company performance was measured using ROE. The study found that Tobin’s Q and ROA were not good predictors of the relationship between CEO-CFO tournaments incentives and company performance of JSE listed companies . This is after all five models could not find a significant relationship The implication of this study is for the remuneration committee to consider the implications of the pay gap between the CEO and CFO when setting executive compensation. This research contributes to the body of literature on factors affecting company performance by introducing a new variable called CEO-CFO tournament incentives.