Corporate governance, board connections and remuneration

Abstract

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.

Corporate governance, policies, and outcomes: The appointment of military connected boards and sustainability

“…These are clear signs of conflicts of interest where military connected directors or executives make suboptimal financial decisions. Like Arayakarnkul et al (2022), we find evidence supporting agency cost theory. However, our findings contradict the findings of Benmelech and Frydman (2015), Kim et al (2017), Koch‐Bayram and Wernicke (2018), Law and Mills (2017), and Xie and Hao (2017) who finds military executives are more conservative.…”

“…For example, Cooper et al (2010), Goldman et al (2008Goldman et al ( , 2013, and Jayachandran (2006) explore politically connected firms in the United States, Ferguson and Voth (2008) do it in Germany during the time of Nazi control, Domadenik et al (2016) do it in Slovenia, Bertrand et al (2018) do it in France, and Schoenherr (2019) does it in South Korea. Studies of politically connected firms also cover developing countries such as Indonesia (Fisman, 2001;Leuz & Oberholzer-Gee, 2006), Malaysia (Johnson & Mitton, 2003), and Thailand (Arayakarnkul et al, 2022;Bunkanwanicha & Wiwattanakantang, 2009;Suriyapongprapai et al, 2021).…”

“…Social connections of directors such as political or military connections could potentially direct firms to set sustainable corporate policies and enhance corporate outcomes if corporations optimally and ethically utilize such connections. However, recent studies provide mixed evidence of military connected boards (Arayakarnkul et al, 2022; Simpson & Sariol, 2019; Suriyapongprapai et al, 2021). This leads us to explore whether a military connected board is an effective corporate governance mechanism, leading to sustainable corporate policies and outcomes by using a comprehensive Thai data set over the sample period of 2000–2018.…”

“…Finally, our study provides the implications of the costs and benefits of social connections such as political or military connections. It has been argued that military connections could potentially benefit firms through stewardship and resource dependency theories if directors act on balancing all stakeholders' interests (Arayakarnkul et al, 2022; Suriyapongprapai et al, 2021). However, our findings point toward the outweighed cost of such connections on corporate policies and outcomes.…”

A Pre- and Post- MCCG 2012 Evaluation on the Impacts of Corporate Governance and Intellectual Capital with Firm Performance

“…In short, the principle and guidelines of CG were usually employed by the company to stay away from business failure. Much academic research and the public discussed the significance of CG practices in the business firm (Arayakarnkul et al, 2022).…”