Asymmetric information phenomenon in the link between CEO pay and firm performance

Purpose: The purpose of this paper is to examine the asymmetric behavior between CEO pay and firm performance in Nigeria. Design/methodology/approach: The study adopts a two-step dynamic panel generalized method of moments (GMM) to reveal asymmetric responses of CEO pay to positive and negative shocks in firm performance. Findings: The research outcomes of a two-step dynamic panel GMM) adopted reveal asymmetric responses of CEO pay to positive and negative shocks in firm performance. This implies that CEOs are handsomely compensated for good performance, but not punished for poor performance. Originality/value: The study, therefore, suggests that CEO pay fails to serve as an internal corporate governance mechanism to alleviate agency problem in Nigeria’s listed firms.