Professor Samir Saadi Awarded Grant for Study of Value Based Management

Samir Saadi is the lead investigator in a project to be funded by the Telfer-Sprott Research Fund. His project, “Does Value Based Management Performance Affect CEO Turnover and Compensation?” will receive $10,000 over two years, it was announced at the Telfer-Sprott Research Forum at the end of April. Saadi is an Assistant Professor of Finance at the Telfer School.

Description of the Project

There is a general consensus among academia and practitioners that capital markets reward firms that focus on value-based management (VBM) practices and long-term value creation. VBM is commonly measured using Economic Value Added (EVA) and Market Value Added (MVA). The existing literature, however, puts a great deal of emphasis on the relationship between value creation and stock return performance. Samir Saadi with colleagues Vijay Jog, Carleton University and Shantanu Dutta, University of Ontario Institute of Technology seeks to extend the literature by examining whether tenure and compensation structure of senior managers would be tied to relevant VBM performance metrics of the firm. The team will also investigate whether the quality of corporate governance influences the relationship between a firm’s performance, and probability of CEO turnover and compensation structure. Finally, they will examine whether and how the recent financial crisis affected the relationship between a firm’s performance and compensation structure and the probability of CEO turnover. An empirical analysis will be conducted using a sample of S&P 1500 firms from the years 2002 - 2013.