Environmental Social and Governance, Executive Remuneration, and Firm Performance

2021 ◽  
pp. 10-33
Author(s):  
Will Mackay ◽  
Lei Xu
Keyword(s):  
Firm Performance ◽  
Executive Remuneration

Investigating the associations between executive compensation and firm performance

2018 ◽  
Vol 19 (2) ◽  
pp. 245-270 ◽  
Author(s):  
Nader Elsayed ◽  
Hany Elbardan
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Stock Exchange ◽  
Performance Pay ◽  
Simultaneous Equation ◽  
Future Research ◽  
Content Type ◽  
Executive Remuneration ◽  
Study Results ◽  
And Performance

PurposeWhile there have been extensive empirical investigations of pay-performance sensitivity, the perspective of performance-pay has received less attention to date. While executive compensation is sensitive to firm performance, firm performance is also likely to be affected by executive compensation. Adopting multiple theoretical perspectives, the purpose of this paper is to examine whether executive compensation has a greater influence on firm performance or whether the latter has a greater influence on compensation.Design/methodology/approachUsing data from a five-year period (2010-2014) for Financial Times and Stock Exchange 350 companies, the authors employ a set of simultaneous equation modelling to jointly investigate, after accounting for endogeneity problem, the mutual association of executive compensation and firm performance by employing four control variables (board size, non-executive directors, leverage and boardroom ownership).FindingsThe authors find strong evidence for the greater influence of executive compensation on firm performance than the pay-performance framework. This finding supports the tournament theory compared with the agency perspective.Research limitations/implicationsInevitably, there are limitations in a wide-ranging study of this nature that could be addressed in future research. As any empirical study utilising company data, there may be concerns to the effect of survivorship bias and the manner in which companies have reorganised, if there is any, themselves during the period under examination. There are also issues as to missing data, some measures relating to both executive compensation and corporate governance are not provided by the BoardEx database.Practical implicationsThe study results provide evidence that using the tournament perspective by remuneration committees as a guide for determining executive compensation helps in achieving better performance. This helps in developing appropriate mechanisms for setting executive remuneration.Originality/valueThis paper combines an empirical investigation of the frameworks of pay-performance and performance-pay and develops a system of six simultaneous equations to examine the associations between executive compensation and firm performance.

scholarly journals Directors’ remuneration, corporate governance and firm performance linkages: Evidence from the emerging country

2020 ◽  
Vol 18 (1, Special Issue) ◽  
pp. 382-392 ◽  
Author(s):  
Tarun Kumar Soni ◽  
Amrinder Singh
Keyword(s):  
Firm Performance ◽  
Positive Relationship ◽  
Least Square ◽  
Governance Mechanism ◽  
Short Term ◽  
Board Size ◽  
Performance Variables ◽  
Long Run ◽  
Executive Remuneration ◽  
New Guidelines

The study examines the trends and patterns in remuneration of directors working for the largest 30 listed companies in India over the past 18 years, i.e., from 2002 to 2019. It tries to establish short-term and long-run relationships between the director’s remuneration and firm performance after controlling for the firm’s size, governance, leverage, and risk for the sample companies. The study found a significant increase in remuneration for the period of study, especially after the new guidelines on executive remuneration in the Indian Companies Act, 2013. It also confirms a change in the composition of the remuneration in the last five years wherein the proportion of fixed component (salary) has increased, and the component of variable components (bonus/commission, perquisites) have declined. Results also confirm a short-term bi-directional association between directors’ remuneration and firm performance variables. Further, the outcomes of the panel least square regression confirm the subsistence of a strong pay-performance association for the variable components of directors’ remuneration. Furthermore, the paper also found a positive relationship with board size indicating larger boards fail to exercise control on paying excessive remuneration to its directors. The positive relationship reported among directors’ remuneration and firm performance measures is partially in line with past studies (Chakrabarti, Subramanian, Yadav, & Yadav, 2012; Ghosh, 2006; Ozkan, 2011). However, our results contradict the existing relationship with board size and directors’ remuneration highlighting the need to strengthen governance mechanism in the Indian scenario.

Executive Remuneration and Firm Performance: The Case of Large German Banks, 1854–1910

2004 ◽  
Vol 46 (4) ◽  
pp. 525-543 ◽  
Author(s):  
Carsten Burhop
Keyword(s):  
Firm Performance ◽  
Executive Remuneration

Do Tax Reforms Affect Firm Performance and Executive Remuneration? Evidence from a Compressed Wage Environment

Economica ◽  
2011 ◽  
Vol 79 (315) ◽  
pp. 493-515 ◽  
Author(s):  
Harald Dale-Olsen
Keyword(s):  
Firm Performance ◽  
Tax Reforms ◽  
Executive Remuneration

scholarly journals Remuneration committees, executive remuneration, and firm performance in Indonesia

Heliyon ◽  
2020 ◽  
Vol 6 (2) ◽  
pp. e03452
Author(s):  
Iman Harymawan ◽  
Dian Agustia ◽  
Mohammad Nasih ◽  
Azmi Inayati ◽  
John Nowland
Keyword(s):  
Firm Performance ◽  
Executive Remuneration

scholarly journals Board composition, executive remuneration, and corporate performance: The case of REITs

2004 ◽  
Vol 2 (1) ◽  
pp. 104-118 ◽  
Author(s):  
Turki Alshimmiri
Keyword(s):  
Firm Performance ◽  
Corporate Performance ◽  
Negative Relationship ◽  
Stock Exchanges ◽  
Outside Directors ◽  
Board Size ◽  
Main Hypothesis ◽  
Final Sample ◽  
Executive Remuneration ◽  
Extra Step

This study strives to take an extra step to sharpen the comprehension of one aspect of agency theory as well as to extend previous research by examining the role of board of directors and managerial remuneration in enhancing corporate performance in the REITs industry. The main hypothesis in this study will be twofold. First, managerial remuneration is related to corporate performance. Second, the ratio of outside directors is related to corporate performance. This study will use a sample of REIT firms as of the end of 1996. The sample will consist of the actively traded REITs listed in the public stock exchanges. The final sample that meets all the criteria includes 167 REITs. The results indicate that there is a negative relationship between cash managerial remuneration and firm performance. Moreover, this study confirms a nonlinear relationship between board size and firm performance. The relationship is negative when board size is small, and it turns positive when board size grows.

Global knowledge hubs and their impact on firm performance : the perspective of maritime Singapore

2015 ◽  
Author(s):  
Beverly Charis Shi Yun Tan
Keyword(s):  
Firm Performance ◽  
Global Knowledge
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