Women Directors’ Compensation and Firm Performance of an Emerging Economy: India

Abstract

This probably maiden study for Indian financial market on executive compensation uses novel approach by using data of women director's compensation of firm listed at Bombay stock exchange (BSE)India. The methodology adopted for this study is multivariate regression method; this method is common for the research on compensation, on the basis of the survey of literature which treats total compensation paid to the director as dependent variable and firm performance as independent variable. This study adds to the literature one more equation that is impact of firm performance (dependent variable) on compensation (independent variable). Further by using the holistic combination which is rare in the literature of executive compensation, both measures of firm performance mainly accounting measures (EPS, ROCE and RONW) and market measures (P/E, P/BV) gives comprehensive view of firm performance in relation to compensation. The control variables mainly net sales, R and D and total assets are drawn from literature often known as instrumental variable approach in econometrics. The boundary condition for the sample is BSE-500 firms listed at Bombay stock exchange out of this BSE-500 firms sample of 407 firms are used for study.