Non-executive Director Compensation and Financial Distress in China and South Africa: A Comparative Analysis in State-Owned Enterprises

Abstract

The 21st century has witnessed the rise of new and major economic regions that were initially overlooked by traditional economic superpowers. This study examines two such economies namely: China and South Africa. Certain attributes of the agency theory are examined. Henceforth, the research investigates the relationship between non-executive directors (NEDs) compensation and financial distress within listed firms. Emphasis is placed on the operations of listed state-owned enterprises (SOEs). NEDs play a vital role in reducing agency costs through the advising and monitoring of the firm’s senior management, thereby aligning shareholder interests with those of senior management. This study therefore attempts to explore these aspects through the use of quantitative research methods and comparative analysis. The revised Altman Z-score model which incorporates features unique to emerging markets is used to measure financial distress. The findings indicate that in both countries financial distress will result in a reduction in NEDs pay.

An Investigation of the Link between Major Shareholders’ Behavior and Corporate Governance Performance before and after the COVID-19 Pandemic: A Case Study of the Companies Listed on the Iranian Stock Market

“…Recent research shows that the concept of ownership, normally centralized among a small number of major shareholders, has shifted toward an equally significant symbolic contradiction among major controlling shareholders and minority shareholders (Connelly et al 2010;Luyckx et al 2022). Furthermore, major shareholders can benefit minority shareholders by supervising managers (Agrianti et al 2021;Aboud and Yang 2022), but alsobe noxious if they pursue personal aims different from maximizing profits or diminishing valuable management incentives (Burkart et al 1997;Emuron et al 2022). Outside the United States, the attendance of several major shareholders with considerable blocks of stock is common (Barca and Becht 2001;Daoud and Kharabsheh 2022).…”