Are University Executives Paid for their Performance?

• In Event: Financial Accounting and Reporting 4

Abstract

My study examines the pay-for-performance relationship surrounding executive compensation in higher education. There has been much criticism of the rising levels of university presidential pay, particularly in the public sector, citing it is pay without performance. Proponents of the increasing pay levels contend that the ever changing role of the university president and competition in the market place for talent warrants such compensation. Using data obtained from The Chronicle of Higher Education website, I find a highly significant and positive relationship between compensation for executives at four-year public institutions and both the levels of university endowment and university graduation rates. These results support the pay-for-performance debate. My study contributes to the literature examining pay-for-performance in higher education with an empirical analysis examining the determinants of university executive compensation.

Author

• Theresa F Henry, Seton Hall University