The Effect of Compensation Committee Quality on the Association between CEO Cash Compensation and Accounting Performance

Sun, Jerry; Cahan, Steven F.

doi:10.1111/j.1467-8683.2008.00726.x

Cited by 98 publications

(75 citation statements)

References 70 publications

(115 reference statements)

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“…Also, Cornett et al (2009) report that the number of board meetings has a positive effect on the PSS. Finally, the empirical evidence is generally consistent with these theoretical predictions relating to the effect of nomination and remuneration committees on the PPS (Benito & Conyon 1999;Sun & Cahan, 2009). For example, and consistent with Vefeas (1999), Chhaochharia and Grinstein (2009) document a positive link between nomination committees and the quality of new director appointments in the US.…”

Section: The Effect Of Board Structure (Effectiveness) On the Ppssupporting

confidence: 70%

Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

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Executive pay and performance: the moderating effect of CEO power and governance structure. International Journal of Human Resource Management,(doi:10.1080/09585192.2017 This is the author's final accepted version.There may be differences between this version and the published version. You are advised to consult the publisher's version if you wish to cite from it.http://eprints.gla.ac.uk/121453/ Executive pay and performance: The moderating effect of CEO power and governance structure AbstractThis paper examines the crucial question of whether chief executive officer (CEO) power and corporate governance (CG) structure can moderate the pay-for-performance sensitivity (PPS) using a large up-to-date South African dataset. Our findings are three-fold. First, when direct links between executive pay and performance are examined, we find a positive, but relatively small PPS. Second, our results show that in a context of concentrated ownership and weak board structures; the second-tier agency conflict (director monitoring power and opportunism) is stronger than the first-tier agency problem (CEO power and self-interest). Third, additional analysis suggests that CEO power and CG structure have a moderating effect on the PPS. Specifically, we find that the PPS is higher in firms with more reputable, founding and shareholding CEOs, higher ownership by directors and institutions, and independent nomination and remuneration committees, but lower in firms with larger boards, more powerful, and long-tenured CEOs. Overall, our evidence sheds new important theoretical and empirical insights on explaining the PPS with specific focus on the predictions of the optimal contracting and managerial power hypotheses. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, pay, and performance proxies.

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Section: The Effect Of Board Structure (Effectiveness) On the Ppssupporting

confidence: 70%

Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

View full text Add to dashboard Cite

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“…In line with the theoretical literature, a strand of the empirical literature suggests a positive connection between the presence of monitoring board committees and market valuation (Wild, 1994;Chhaochharia and Grinstein, 2009;Sun and Cahan, 2009 Of special interest to this study, Mangena and Chamisa (2008) find in a sample of 81 SA listed firms that the presence of an audit committee significantly reduces the possibility of a firm being suspended from the stock exchange. This indicates that the presence of audit committees improve internal monitoring, reduce internal fraud and enhance compliance with corporate regulations.…”

Section: Literature Review: Theory Evidence and The Development Of Hmentioning

confidence: 54%

“…One line of the theoretical literature suggests that the establishment of these committees can impact positively on market valuation (Harrison, 1987;Wild, 1994;Sun and Cahan, 2009). First, and unlike the main board or operating committees, such as finance and executive committees, monitoring board committees are usually entirely composed of independent non-executive (NEDs), making them better placed to protect shareholders' interests by effectively scrutinising managerial actions (Klein, 1998;Vefeas, 1999b).…”

Section: Literature Review: Theory Evidence and The Development Of Hmentioning

confidence: 99%

“…This also allows the main board to devote attention to specific areas of strategic interests and responsibility (Klein, 1998;Sun and Cahan, 2009). Thus, having independent monitoring board committees can improve firm valuation by enhancing the capacity of corporate boards in reducing the number of avenues by which opportunistic managers can expropriate corporate resources through greater monitoring.…”

Section: Introductionmentioning

confidence: 99%

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Monitoring board committee structure and market valuation in large publicly listed South African corporations

Ntim

2013

IJMFA

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We examine the association between the presence of monitoring board committees (i.e., audit, nomination, and remuneration) and market valuation in South Africa using a sample of listed corporations. We find a significant positive connection between the presence of monitoring board committees and market valuation, but only in corporations that have independent monitoring board committees and/or all three monitoring board committees that we have investigated simultaneously. This implies that the market values corporations with independent and/or the three monitoring board committees more highly.Our results provide empirical support for agency theory, which indicates that the presence of independent board committees increases the capacity of corporate boards to effectively advise, monitor and discipline top management, and thereby improving market valuation.

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“…Board committee literature in many instances has examined the effect of single board committees rather than the entire standing committees of the board (Newman & Mozes,1999;Sun & Cahan, 2009) making it difficult to link board effectiveness to board standing committees. Against this backdrop, this paper provides an examination of how the number of board committees influences the financial performance among listed commercial banks in Kenya.…”

Section: Kamazima Mathenge and Nguimentioning

confidence: 99%

Influence of Corporate Governance Structure on Financial Performance: A Case of Listed Commercial Banks in Kenya

2017

JEE

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This study aimed at establishing the effects of corporate governance practices and policies on the financial performance of listed commercial banks. A cross-sectional research design was used in the study. Whereas there has been renewed interest in corporate governance, there is a paucity of relevant data from empirical studies. The study sought to eliminate the limitations in the depth of the understanding of corporate governance issues with respect to financial performance in the banking sector. The population involved were all the 10 listed commercial banks in Kenya. Return on assets and return on equity were key variables that defined bank performance; whereas firm size was adopted as a control variable. Corporate governance structures were measured using board of directors, ownership structure, and audit committee structure. The study used secondary data which was gathered from company annual financial reports, company websites and other financial statements spanning a period of five years from 2012-2016. Data analysis was primarily done using descriptive and inferential statistics. Under descriptive statistics; mean, maximum, minimum and standard deviation were used and under inferential statistics; Pearson correlation analysis and multiple regression analysis were employed. The findings of the study among others indicated that there is a negative and significant relationship between Board of Directors, ownership structure and audit committee structure with the financial performance of listed commercial banks in Kenya in terms of Return on Assets (ROA) and Return on Equity (ROE). Specifically, the study concluded that the number of board committees, number of non-executive directors, percentage of foreign ownership and number of audit committee meetings have a positive impact on the financial performance of commercial banks while board size, government ownership, and board diversity have a negative impact on financial performance of listed commercial banks.

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The Effect of Compensation Committee Quality on the Association between CEO Cash Compensation and Accounting Performance

Cited by 98 publications

References 70 publications

Executive pay and performance: the moderating effect of CEO power and governance structure

Executive pay and performance: the moderating effect of CEO power and governance structure

Monitoring board committee structure and market valuation in large publicly listed South African corporations

Influence of Corporate Governance Structure on Financial Performance: A Case of Listed Commercial Banks in Kenya

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