Directors’ Remuneration and Corporate Social Responsibility: A Study on Malaysian Listed Firms

Razali, Mohd Waliuddin Mohd; Ying, Hew Jing; Lunyai, Janifer; Rahman, Noraisyah Abd

doi:10.5430/afr.v8n1p118

Cited by 3 publications

(4 citation statements)

References 29 publications

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“…Our result supports the agency theory assumption, which emphasises the role of the non-executive directors in improving management monitoring, indicating that investing in highly qualified external directors would bring better monitoring of executive directors' actions, hence improving disclosure practices. These results are in line with those of previous studies that found a positive relationship [68,88]. The results are also in line with the findings reported by [85], who documented a positive relationship between NEDREM and financial reporting quality in Malaysia (proxied by earnings management).…”

Section: The Relationship Between Board Characteristics and Ir Practicesupporting

confidence: 93%

“…Some empirical research examining the effect of board remuneration on non-financial disclosure provides mixed results. Some studies have shown that director remuneration is positively correlated with the voluntary disclosure level [87], environmental performance [67], CSR reporting [88] and sustainability disclosure [68]. This is because the board's remuneration is an indicator of a powerful monitoring tool.…”

Section: Board Remuneration and Ir Practicementioning

confidence: 99%

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Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter?

et al. 2022

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Integrated reporting (IR) is the latest topic in corporate reporting that has raised interest in the disclosure literature. Although the board’s role in IR practice has received significant attention in developed countries, this effect is still unexamined in an emerging market like Malaysia. Thus, this study sought to fill this gap in the IR literature by investigating the impact of the board of directors’ characteristics on the quantity and quality of IR disclosure. The study also examined whether the existence of a sustainability committee affects the board-IR relationship. The study used all listed companies in Bursa Malaysia that applied IR strategy from 2017 to 2020 to test the hypotheses. It employed a content analysis technique to measure the quantity and quality of IR using an index with 100 items based on the International Integrated Reporting Council guidelines. Multivariate ordinary least squares (OLS) regression was applied to examine these relationships. The analysis showed that board size, independence, gender diversity, and non-executive remuneration were positively and significantly related to greater IR disclosure, suggesting that the board of directors has a monitoring role in reducing agency problems and protecting stakeholders’ interests. However, multiple directorships did not affect IR disclosure. The analysis also showed that the presence of a sustainability committee positively affected IR disclosure, and had a moderating effect on the board-IR disclosure relationship. Our result was robust to alternative measures of the corporate board and an alternative regression model. This study is among the first to provide empirical evidence of the board and sustainability committee’s significant role in enhancing IR strategy. The findings may benefit regulatory bodies, policymakers, company managers, investors, and researchers in better understanding how directors’ characteristics influence companies’ IR practices.

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Section: The Relationship Between Board Characteristics and Ir Practicesupporting

confidence: 93%

Section: Board Remuneration and Ir Practicementioning

confidence: 99%

Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter?

et al. 2022

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“…Hasil tersebut dikarenakan remunerasi dewan direksi dapat menyelaraskan kepentingan pemegang saham dan manajer untuk bekerja keras agar dapat berkurangnya biaya agensi, meningkatkan arus kas dan penilaian perusahaan. Hasil penelitian ini mendukung hasil penelitian (Haque (2017), Hu & Loh (2018), Maas & Rosendaal (2016), Mohd Razali et al (2019, Premavari & Utami (2020) dan Velte (2016)). Penelitian Hartikainen et al (2021) berpendapat berbeda dengan penelitian lainnya yang membuktikan bahwa variabel remunerasi dewan direksi tidak signifikan terhadap indeks laporan keberlanjutan.…”

Section: ______unclassified

Dampak Struktur Dewan Direksi pada Indeks Laporan Keberlanjutan

Chai

Suparman

2022

JIAKES

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Laporan keberlanjutan merupakan media yang digunakan untuk melaporkan kinerja lingkungan, sosial, ekonomi dan tata kelola perusahaan kepada seluruh pemangku kepentingan secara bertanggung jawab. Tujuan dari penelitian ini untuk mengetahui pengaruh struktur dewan direksi terhadap indeks laporan keberlanjutan. Ukuran, independensi, keragaman gender, keahlian dan remunerasi dewan direksi serta dewan direksi asing yang digunakan dalam mewakili struktur dewan direksi. Penelitian ini menggunakan variabel kontrol yaitu ukuran perusahaan. Objek pengumpulan data diambil dari perusahaan yang terdaftar di Bursa Efek Indonesia dari tahun 2016 – 2020 yang mengungkapkan laporan keberlanjutan. Data observasi yang sesuai dengan kriteria sebanyak 290 data. Data obeservasi yang digunakan dalam pengujian hipotesis sebanyak 273 yang telah di outlier sebanyak 17 data dan diuji menggunakan regresi panel. Hasil penelitian ini menunjukkan bahwa tingkat pengungkapan dalam laporan keberlanjutan perusahaan publik di BEI masih rendah. Variabel ukuran dewan direksi mempunyai pengaruh signifikan negatif terhadap indeks laporan keberlanjutan. Remunerasi dewan direksi dan variabel kontrol sektor perusahaan memiliki hubungan pengaruh positif terhadap indeks laporan keberlanjutan. Variabel bebas dan variabel kontrol lainnya yaitu independensi, keragaman gender dan keahlian dewan direksi, serta dewan direksi asing tidak berbengaruh signifikan terhadap indeks laporan keberlanjutan.

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“…Hubbard et al (2017) in their study also proves that investment in CSR practices in the past results in better financial performance thereby boosting the CEO's career and therefore resulting in more compensation. The increase in remuneration motivates the directors of the firm to perform more CSR practices which ultimately results in enhanced shareholder's value (Razali et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

The nonlinear effect of executive compensation on corporate social responsibility performance

Pareek

Sahu

2023

RAMJ

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PurposeTaking cues from the fact that there remains a dearth in the establishment of theoretical and empirical relationship between executive compensation and corporate social responsibility (CSR) performance of the firms, this study attempts to explore the non-linear relationship between the said variables.Design/methodology/approachThe study utilizes a strongly balanced panel data set of 179 non-financial National Stock Exchange (NSE) 500 listed firms for the study period of 2015–2020. The study further employs both static as well as Arellano-Bond dynamic panel model under generalized method of moments (GMM) framework to establish the relationship between executive compensation and CSR performance of the sampled firms.FindingsThe study acknowledges an inverted U-shaped relationship between executive compensation and environmental, social and governance (ESG) score of the firms. According to the robust estimator, an increase in the level of executive compensation is said to affect CSR performance positively until it surpasses a threshold level of 18.7 percent.Practical implicationsOne of the major takeaways that the study provides for the corporate policymakers is that the level of compensation can only motivate the executives to take up socially responsible work up to a certain level surpassing which the executives becomes resistant towards any benefits provided by the CSR performance and get inclined towards economical performances of the firm. At the later stage, the economical expansionary investment benefits overweigh the personal career benefit gained by the executives from the CSR performances of the firm.Originality/valueThe nonlinearity relationship between executive compensation and CSR performance and the threshold level providing the two-fold effect of compensation on the CSR performance of the firms attempted by this study is a rare attempt in an emerging economy like India.

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Directors’ Remuneration and Corporate Social Responsibility: A Study on Malaysian Listed Firms

Cited by 3 publications

References 29 publications

Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter?

Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter?

Dampak Struktur Dewan Direksi pada Indeks Laporan Keberlanjutan

The nonlinear effect of executive compensation on corporate social responsibility performance

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