Interactive effects of executive compensation, firm performance and corporate governance: Evidence from an Asian market

Farooque, Omar Al; Buachoom, Wonlop; Hoang, Nam

doi:10.1007/s10490-018-09640-2

Cited by 45 publications

(39 citation statements)

References 111 publications

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“…Al Farooque et al (2019) study 432 Thai listed firms post Asian crisis between 2000 and 2011 and argue that type II agency conflicts between large shareholders and minority shareholders are more likely to be the dominant conflict of interest in Thai firms than the type I conflict between shareholders and management. The study aims to investigate the tridirectional (e.g.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

“…Although Al Farooque et al (2019) is an interesting paper, there are a few criticisms and improvements that can be made. First, the variables used in the models to study the relationship with Type II agency issues are exactly the same as those used in many studies that predominantly examine the Type I agency issue.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

“…Al Farooque et al (2019) criticise FE analysis; however, the study could be improved by conducting FE or random effects (RE) tests as a tool for comparison, as well as to control fixed unobserved heterogeneity and make the results more robust. In this study, the authors were unable to compare the tri-directional relationships with any others as this was not tested.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

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The effect of board composition and managerial pay on Saudi firm performance

Al‐Faryan

2021

Rev Quant Finan Acc

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Using five empirical methodologies to account for endogeneity issues, this study investigates the effects of board independence and managerial pay on the performance of 169 Saudi listed firms between 2007 and the end of 2014. Studying board independence and managerial pay utilises the main internal governance mechanism in relation to firm performance; therefore, the effect of the 2009 exogenous regulatory shock on board independence was also examined to learn whether it impacted firm performance. The empirical results show that the board composition–performance relationship is endogenous. Strong evidence is found through the dynamic generalised method of moments estimation, which indicates that board composition has a positive relationship with return on assets, and poor past performance of listed firms has a negative impact on the current level of performance. The difference-in-differences approach results show a positive relationship between board composition, stock returns, and Tobin’s Q. The findings also reveal that managerial pay has a positive relationship with firm performance, although when endogeneity is considered, there is a smaller positive relationship and a decrease in significance levels. Thus, pay-for-performance in Saudi Arabia matters, and firms are not simply controlled by the government. The results of this study have implications for both policy makers and investors. In particular, policy makers and Saudi regulators can evaluate the impact of Saudi corporate governance arrangements and, in so doing, highlight changes in corporate governance arrangements that need to be made to achieve their economic objectives, such as Vision 2030. This study also contributes to the literature by showing the importance of considering endogeneity in studies.

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Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

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The effect of board composition and managerial pay on Saudi firm performance

Al‐Faryan

2021

Rev Quant Finan Acc

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“…Jensen and Murphy (1990) in their work stated that there exists pay-performance sensitivity and firm performance shows a positive influence in CEO pay. The positive relationship between the two aspects is being given by Farooque et al (2019), McGuire (2018, Waddock and Graves (1997), Griffin and Mahon (1997) while the negative relationship is indicated by Amewu and Alagidede (2021), Hasnan et al (2020), Kline et al (2017), Wright and Ferris (1997) among others. Works of Nicola et al (2016) and Firth et al (2006) established no relationship between both the constructs.…”

Section: G a L L E Y P R O O Fmentioning

confidence: 97%

Does Firm Performance Impact Top-Level Executive Compensation in ESG Companies? Evidence from India

Rath¹,

Deo²

2021

AJAG

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The huge disparity in the pay given to higher level executives in Indian companies has stirred a nation-wide debate regarding the viability of the pay-performance concept. On the other hand, the top-notch businesses claim to be good social performers by adhering to the rules, regulations and norms prevailing in the country concerning the welfare of the community encompassing it; broadly referred to as Environmental, Social and Governance (ESG) companies. The purpose of this paper is to examine and determine the link between firm performance (taken as independent variable) and compensation pay (considered as dependent variable) of such large as well as socially responsible companies. For sample of the firms, data has been collected from NSE Nifty 100 ESG Index and data for all other measures has been extracted from CMIE Prowess database. Panel regression results indicate that Return on Equity (ROE) has a significant negative impact while stock return of investors do have a significant positive impact on the compensation pay. In order to overcome the persistent underlying endogeneity issue, One-step System Generalised methods of moments (GMM) estimator has been employed. The overall findings indicate that accounting measure of firm performance exerts a significant impact on the compensation paid to the executives in ESG firms of India.

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“…In addition, they can monitor strategy, performance and risk, and encourage good corporate citizenship and organizational accountability. Specifically, Farooque et al (2019) research the interaction of executive compensation, corporate performance and corporate governance in different systems and governance environments in emerging market economies. Gulati et al (2020) analyze the influence of the size of the board of directors, the turnover rate of CEOs, the number of foreign directors and the level of knowledge, and political relations on the company's performance.…”

Section: Measures Of Corporate Governancementioning

confidence: 99%

The Impact of Religious Atmosphere on Corporate Governance: An Empirical Study Based on the Number of Temples around Listed Companies

Liu¹,

Wang²,

Liang³

2021

JEPF

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Religious belief can affect individual’s behavior. It usually induces managers to be more risk averse, thereby mitigating the agency problem and positively influencing governance. This paper conducts an empirical study to analysis the effect of religious atmosphere on corporate governance. It could be figured out that strong religious atmosphere plays an active role in corporate governance. The stronger the influence of religious tradition on listed companies, the less likely the managers are to violate the rules. Through precepts and deeds, these religious traditions are passed on from generation to generation and have become a significant factor affecting human economic behavior.

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Interactive effects of executive compensation, firm performance and corporate governance: Evidence from an Asian market

Cited by 45 publications

References 111 publications

The effect of board composition and managerial pay on Saudi firm performance

The effect of board composition and managerial pay on Saudi firm performance

Does Firm Performance Impact Top-Level Executive Compensation in ESG Companies? Evidence from India

The Impact of Religious Atmosphere on Corporate Governance: An Empirical Study Based on the Number of Temples around Listed Companies

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