Community and compensation: Director remuneration in Thailand

Budsaratragoon, Pornanong; Lhaopadchan, Suntharee; Thomsen, Steen

doi:10.1016/j.ribaf.2019.101124

Cited by 8 publications

(20 citation statements)

References 62 publications

(118 reference statements)

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“…Finally, our study contributes to the understudied topic of board compensation. We first highlight the economic and symbolic significance of boardroom pay and subsequently provide evidence on the role of institutional forces that shape board compensation (e.g., Boivie et al, 2015; Budsaratragoon et al, 2020). We find evidence suggesting that coercive pressures do not determine board compensation; instead, we show that normative and mimetic pressures do.…”

Section: Discussionmentioning

confidence: 99%

“…These costs are not uniform across firms but vary depending on the firm's strategic choices and environmental contingencies (Collin et al, 2017). Because of its substantive and symbolic value for the firm, as well as its discretionary nature (Boivie et al, 2015; Budsaratragoon et al, 2020), board compensation captures the observable cost of conformity or nonconformity to good governance.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…There is growing evidence suggesting that an institutional norm can be a key tool defining board compensation when faced with the uncertainty of objectively evaluating directors' performance (Boivie et al, 2015; Budsaratragoon et al, 2020). Namely, benchmarking board compensation against the good governance norm can simplify the decision‐making process as it is generally associated with enhanced efficiency and legitimacy (Fernandez‐Alles et al, 2006).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…Third, we contribute to the growing research on boardroom compensation—which has been criticized for the lack of theoretical development (Budsaratragoon et al, 2020). Although previous work on this topic has mainly relied on the economic explanations of boardroom pay, we advance research by bringing attention to the global institutional norm as an important institutional reference used by firms when setting board compensation and design strategies (Boivie et al, 2015; Budsaratragoon et al, 2020) and as a conformity instrument to reach both efficiency and legitimation simultaneously (Tolbert & Zucker, 1983).…”

Section: Introductionmentioning

confidence: 98%

“…Given the team nature of the board's work, the largest portion of board compensation includes the fixed fees paid regardless of members' individual contributions, making it especially difficult to determine and measure the directors' input to firm performance. In the presence of uncertainty stemming from the weak link between directors' inputs and firm performance, existing institutional norms are expected to play an important role in determining board compensation (Boivie et al, 2015; Budsaratragoon et al, 2020), making it a useful tool to examine the cost of conformity/nonconformity to global good governance norm.…”

Section: Introductionmentioning

confidence: 99%

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The cost of conformity to good governance: Board design and compensation

Ponomareva

Federo

Aguilera

et al. 2021

Corporate Governance

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Research question/issue Albeit the fact that the “one‐size‐fits‐all” corporate governance model has been mostly discarded, the debate on what constitutes a well‐governed firm has converged toward a set of practices that comprise what we refer to as the global good governance norm. Whereas extant research has focused mainly on the benefits of good governance, we build on neo‐institutional theory to explore how firm conformity or nonconformity to this global norm is associated with the cost of board governance, captured as board compensation. Research findings/insights Using a fuzzy set qualitative comparative analysis (fsQCA) of firms listed in the Stockholm Stock Exchange, we find that the configurations of board practices conforming to the global good governance norm are associated with higher board compensation than those that score low on conformity. Based on our findings, we deduce four archetypical board design strategies jointly shaped by two central forces: the pressure toward conformity to the good governance norm and the extent of governance discretion, denoting firm agentic behavior. Theoretical/academic implications First, our study highlights that conformity to the global good governance norm is accompanied with higher costs than nonconformity. Second, while most of the extant research discusses conformity and agentic behavior as two opposing forces, we uncover that they simultaneously co‐exist in board governance, stressing their interconnectedness. Practitioner/policy implications Conformity to the global good governance norm influences the strategic choices of board designs and the costs associated with such choices.

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Section: Discussionmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 98%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The cost of conformity to good governance: Board design and compensation

Ponomareva

Federo

Aguilera

et al. 2021

Corporate Governance

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Corporate governance, board connections and remuneration

Arayakarnkul

Chatjuthamard

Lhaopadchan

et al. 2022

Corp Soc Responsibility Env

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Good corporate governance underpins good corporate social responsibility (CSR) through value-creating stakeholder relationships. When properly composed and compensated, the board of directors, an important corporate governance mechanism, plays an efficient monitoring role, reducing agency cost. Exploring board connections and remuneration of the top 100 listed firms in the Stock Exchange of Thailand as a case study, we find evidence supporting agency cost of board connections such that politically connected board members are paid higher. However, politically connected board members play an effective monitoring role in setting top management pay, supporting stewardship and resource dependency theories. Our case study highlights the importance of balancing boards of directors' compositions and remunerations to achieve CSR outcomes and value creation among stakeholders.

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