Board Remuneration, Company Performance, and Ownership Concentration: Evidence from Publicly Listed Malaysian Companies

Doğan, Ergün; Smyth, Russell

doi:10.1355/ae19-3f

Cited by 53 publications

(56 citation statements)

References 52 publications

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“…In contrast, Tee and Hooy (2009) examined a sample of government-linked companies (GLCs) from 2001-2006, and found a negative relationship between directors' remuneration and company performance (measured by lagged return on equity). However, Dogan and Smyth (2002) and Abdullah (2006) found no evidence that directors' remuneration has an impact on firm performance. Core et al (1999) reported that excess CEO compensation has a negative association with stock returns and operating performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Directors’ Remuneration and Firm’s Performance: A Study on Malaysian Listed Firm under Consumer Product Industry

Razali¹,

Yee²,

Hwang³

et al. 2018

IBR

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Remuneration is broadly used as an incentive that affects decisions made and strategies planned by directors which cause great impact on firm performance and profitability. This study aims to investigate the directors' remuneration of the consumer products sector focusing particularly on Malaysian listed companies under Consumer Product Industry. These firm's performances are measured by return on assets (ROA) and return on equities (ROE). This study consists a sample of 40 Malaysian listed companies for the period of 2012 to 2014. After controlling for board size, CEO duality, firm size, firm age, and leverage; the regression results show director remuneration has positive relationship with firm performance (measured by ROA and ROE). This suggests that high remuneration is able to motivate and retain directors in order to perform their duty and work harder for the best interest of shareholders. The result also shows all variables affect firm performance differently. For future research, we recommend that this study be expanded using more samples from other industries and other measurement of firm performances such as growth and ratings.

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Section: Literature Reviewmentioning

confidence: 99%

Directors’ Remuneration and Firm’s Performance: A Study on Malaysian Listed Firm under Consumer Product Industry

Razali¹,

Yee²,

Hwang³

et al. 2018

IBR

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show abstract

“…The literature has demonstrated that it is associated with factors such as corporate governance (Bozec & Bozec, 2007;Desender et al, 2013;Shleifer & Vishny, 1997), firm performance (Burkart et al, 1997;Shleifer & Vishny, 1986;Thomsen & Pedersen, 2000), board composition (Rediker & Seth, 1995;Prevost et al, 2002;Bozec & Bozec, 2007), board remuneration (Dogan & Smyth, 2002), firm value (Jensen & Meckling, 1976;Selarka, 2005;Shleifer & Vishny, 1986;Slovin & Sushka, 1993;Perrini, Rossi, & Rovetta, 2008), dividend policies (La Porta, Lopez-De-Silanes, Shleifer, & Vishny, 2000), investor protection (La Porta, Lopez-De-Silanes, Shleifer, & Vishny, 1998), and mergers and acquisitions activities (Coates, 2010), among others.…”

Section: Theoretical Framework and Hypothesis Developmentmentioning

confidence: 99%

Exploring the determinants of internal audit: Evidence from ownership structure

2017

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The internal audit literature suggests that firms can gain significant added value from internal audit in terms of improving governance processes, reducing audit fees, and detecting fraud. Nonetheless, not all firms use internal audit. A growing literature examining the determinants of internal audit has identified a number of different determinants, such as firm size, strong commitment to risk management, existence of an audit committee, and an independent board chair. This paper contributes to the existing literature by examining the effects of ownership structure on the voluntary use of internal audit. The logistic regression model of this study is based on data from 107 firms listed on NASDAQ OMX Helsinki. It shows that ownership structure is a significant determinant of internal audit. Specifically, the paper shows that foreign ownership, dispersed ownership, and state ownership increase the likelihood of a firm using internal audit.

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“…Kato and Kubo (2006) point out that publicly listed companies are more likely than non-listeds to respond to the interests of shareholders, and therefore they tend to link executives' remuneration to observable measures, such as shareholder return and ROA. Dogan and Smyth (2002) found a positive relationship between total board remuneration and shareholder return in Malaysia. This finding is supported by Ozkan (2007) who also found that the pay-toperformance relationship is positive and significant.…”

Section: 1executives' Remuneration and Company's Performancementioning

confidence: 93%

“…Finance companies are excluded from the sample because of their unique accounting procedures compared to other industries. The presentation of Balance Sheet and Income Statement information in finance companies differs from the normal practice in other industries (Dogan & Smyth 2002).…”

Section: Methodsmentioning

confidence: 98%

“…Jensen and Murphy (1990), Gilson and Vetsuypens (1993), Kato and Kubo (2006), Doucouliagos et al (2007), Ozkan (2007), and Lee (2009), focus solely on CEO remuneration, although Dogan and Smyth (2002) look at the remuneration of company boards as a whole. While Doucouliagos et al (2007) showed that the pay-to-performance association is more relevant to CEO remuneration compared to total board remuneration; this study considers total executive remuneration because they, as a group, act as agents for shareholders, not the CEO individually.…”

Section: Former Researchmentioning

confidence: 99%

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Executive Remuneration, Financial Crisis and ‘Say on Pay’ Rule

Azim

Ahmmod

2014

JIBE

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Among the alternatives to reduce agency conflict, executive remuneration has commonly been perceived as the best possible solution. Financial meltdown is commonly attributed to the large portion of remuneration rewarded to the executives. As a response, 'say on pay' rule, introduced in 2011which provides shareholders right to vote for or against executives remuneration package. Proponents of this new rule argue that reforms will fortify the association between the shareholders and the executives of the board, will ensure that board members execute fiduciary duty placed upon them. However, the critics think this new rule will be unsuccessful in monitor directors' remuneration, and contemplate it to be backward-looking rather than forward-looking. Despite the importance of these issues, contextual analyses of executives' remuneration and company performance in the Australian context are still limited. This paper, using sample from top 200 Australian listed companies, aims to study the relationship between executive remuneration and companies' performance during the financial crisis in 2006-2009. Methodology of this research is based on two approaches: firstly, we investigate the pay-for-performance relationship during the global financial crisis; secondly, identify cause and effects relationships through lead and lag analysis. Overall, this research concludes that Australia's reward system is quite effective and reflects market based performance, specially in respect to Earnings per Share and Dividend Yield. Therefore, the introduction of 'say on pay' rule is appropriate in Australian context.

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Board Remuneration, Company Performance, and Ownership Concentration: Evidence from Publicly Listed Malaysian Companies

Cited by 53 publications

References 52 publications

Directors’ Remuneration and Firm’s Performance: A Study on Malaysian Listed Firm under Consumer Product Industry

Directors’ Remuneration and Firm’s Performance: A Study on Malaysian Listed Firm under Consumer Product Industry

Exploring the determinants of internal audit: Evidence from ownership structure

Executive Remuneration, Financial Crisis and ‘Say on Pay’ Rule

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