CEO Compensation and Firm Performance: Findings from Swedish Listed Real Estate Companies

Sammanfattning

This thesis investigates the relationship between CEO compensation and firm performance in publicly listed Swedish real estate companies. The period analyzed is 2021 to 2024. Our study uses a pooled OLS model using panel data from 30 individual companies. NAV per share and Profit from Property Management are used as sector-specific proxy variables for firm performance. Five robustness tests are also run including a level-log model, a fixed effects model, VIF tests, a correlation test and a log-log model excluding the variable firm size. Total and fixed compensation show no statistically significant association with firm performance in this study. Variable compensation however shows a statistically significant positive association with NAV per share at the 5% significance level. This is consistent with behavioral agency theory, though this association was not found in the fixed effects model. Shareholder CEO status is not significant in the thesis. Firm size is consistently significant and has almost a one-to-one elasticity with profit from property management. Our results suggest that compensation structure may be more important than compensation level in this sector, but that the size of property portfolio may be a stronger predictor of firm performance than CEO compensation.