Abstract:
The study proposes to examine the relationship between CEO compensation
and firm risk with the moderating role of CEO duality. The study aims to add to the
body of knowledge on corporate governance and executive compensation by
investigating the relationship between CEO pay and CEO duality, offering useful
information to academics and professionals alike. This study sample consists of listed
manufacturing firms of the KSE-100 Index from 2015-2023. Using the Feasible
Generalized Least Squares (FGLS) test to address the issues of variance heterogeneity
and autocorrelation in the data, the results show that CEO pay is negatively associated
with firm risk. However, CEO duality does not moderate the relationship between
CEO pay and firm risk. Thus, firms may create compensation plans that promote the
best possible risk-taking while preventing excessive risk exposure.
