Stock Liquidity and CEO Compensation in the US Hospitality Industry

This paper examines the effect of stock liquidity on CEO compensation in the US hospitality industry. By using a panel data sample of 50 US publicly traded hospitality companies from 1993 to 2014, the study finds that US hospitality companies with a high stock liquidity tend to have a higher proportion of equity-based CEO compensation schemes and a lower proportion of cash-based compensation. This study provides the board of directors with useful insights to alleviate agency problem and improve corporate governance efficiency.