Executive compensation, corporate governance and firm performance: evidence from India
by Palanisamy Saravanan; Maram Srikanth; Suhas M. Avabruth
International Journal of Corporate Governance (IJCG), Vol. 7, No. 4, 2016

Abstract: Compensation received by the company directors attracted widespread attention in the recent literature. The existing research focused mainly on the executive compensation, and largely ignored non-executive compensation. Our study focused on the effect of corporate governance and performance variables on the executive as well as non-executive compensation structures in the Indian context. We obtained supporting evidence for managerial power theory as well as tournament theory in this paper. However, we could not find conclusive evidence for the agency theory with regard to executive compensation. Our research shows that as the board size enlarges, executive compensation rises further. However, we found that the proportion of non-executive directors (NEDs) on the board enhances executive compensation. We observed that if the chief executive officer plays dual role (CEO cum chairman) in a firm, NEDs receive lower remuneration. Our results reveal that the corporate governance variables namely board size, CEO duality and proportion of NEDs on the board have significant impact on the non-executive compensation. We affirm that our findings will be useful for the investors as well as institutions viz., the stock exchanges, academic institutions and the regulators as it integrates the relationship among the components of executive compensation, corporate governance and firm performance.

Online publication date: Mon, 20-Feb-2017

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Corporate Governance (IJCG):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com