The compensation of busy directors: An international analysis

Ferris, Stephen P.; Liao, Min‐Yu; Tamm, Chris

doi:10.1016/j.ribaf.2018.04.003

Cited by 15 publications

(14 citation statements)

References 47 publications

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“…Therefore, as far as qualifications are concerned, it seems that aspects related to experience, such as tenure and interlocking, are positively valued in terms of compensation. This evidence is consistent with other papers such as Goh and Gupta (2016) and Ferris et al (2018) and indicates that directors' ability to contribute to board decision-making and their set of resources are valued by the firm.…”

Section: Resultssupporting

confidence: 91%

“…As more transparency is being required to public firms about individual director compensation, some recent papers such as Marchetti and Stefanelli (2009), Horton et al (2012), Bugeja et al (2016), Chen and Keefe (2018), Ferris et al (2018) or Fedaseyeu et al (2018) analyse the influence of director level variables such as their skills or abilities on their compensation, using Human Capital Theory as background for their hypotheses (Becker, 1964;Mincer, 1974).…”

Section: Introductionmentioning

confidence: 99%

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Directors’ Compensation. What Really Matters?

Fraile

Fradejas

2020

Journal of Business Economics and Management

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In the current scenario of increasing social inequality, the debate over the compensation received by directors and executives of large listed companies, and its justification, has intensified. Drawing on Agency Theory and Human Capital Theory, a multilevel analytical technique is used in this paper to examine the influence of firm-level variables and director-level variables on the individual compensation of the members of the board. The results obtained for the continental European context (Spain in particular) partially support the Human Capital Theory. Nevertheless, there is no evidence supportive of Agency Theory, as corporate governance mechanisms do not contribute to moderate the compensation of directors and there is no relationship between corporate performance and the compensation of directors. The analyses by subsamples (categories of directors) reveal that non-executive director’s compensation seems to be set for a group of individuals as a whole, depending mainly on firm-level characteristics, whereas executive director compensation is more based on the unique characteristics that a particular executive brings to the board.

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Section: Resultssupporting

confidence: 91%

Section: Introductionmentioning

confidence: 99%

Directors’ Compensation. What Really Matters?

Fraile

Fradejas

2020

Journal of Business Economics and Management

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“…Further, we conducted a survey of literature to identify the selection criteria that would determine a board with interlocks and meetings. Based on our findings, we use the appointing firm’s characteristics, along with our other independent variables as determinants of director interlocks and board meetings (Baccouche et al , 2014; Ferris et al , 2018; Fich and Shivdasani, 2007). Accordingly, the additional selection variables include the firm characteristics such as lagged stock return and sales growth, along with the initial independent variables and fixed-year and industry effects.…”

Section: Resultsmentioning

confidence: 99%

Limiting role of resource dependence: an examination of director interlocks, board meetings and family ownership

Panicker

Upadhyayula

2020

CCSM

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PurposeThis paper attempts to examine the activity and involvement of board of directors in internationalization activities of firms in emerging markets, by evaluating the resource provisioning roles of interlocks provided by board of directors, and the frequency of board meetings. We demonstrate that the effectiveness of board involvement is contingent upon the levels of family ownership in firms since family ownership could impact the firm’s ability to utilize the presence of different types of board members.Design/methodology/approachThe authors test our hypotheses on a sample of listed Indian companies, extracted from the Prowess database published by the Centre for Monitoring Indian Economy (CMIE), a database of the financial performance of Indian companies. On a panel of 3,133 firm years of 605 unique Indian firms with foreign investments, over a time period of 2006–2017, the authors apply different estimation techniques.FindingsThe results demonstrate that both board meeting frequency and director interlocks are instrumental in supporting internationalization activities in emerging market firms. However, family ownership moderates the role of insider and independent interlocks on internationalization investments in different ways; the authors find that interlocks provided by independent directors support internationalization activities in family firms, whereas those provided by insider directors do not. Further, the study also finds that board meetings are less effective in internationalization of family firms.Practical implicationsThe authors conclude that family firms aiming at international diversification require to develop more connected and networked independent directors to enable internationalization in firms. While independent director interlocks enhance the international investments, it is also useful to know that board meetings are ineffective in utilizing the resources in family firms. This points to the possibility that family firms should device mechanisms to integrate family meetings with board meetings so that they can utilize the within-family processes to aid in their internationalization decisions.Originality/valueThe study contributes to resource dependence theory by understanding its limiting role in family firms. Theoretically, it helps delineate the limiting resource provision role of the insider directors vis-à-vis independent directors. The authors argue that the resource provision role of insider director interlocks does not effectively help in internationalization in comparison to independent director interlocks in family-dominated firms. Consequently, the study shows the limiting role of resource provision and utilization by family-owned firms in comparison to non-family-owned firms.

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“…In this study, remuneration is conceptualized as a motivational tool for directors and executives to improve company performance (Devers et al, 2008). Ferris et al, 2018 shows that an appropriate executive compensation structure can significantly affect firm performance. We believe that it is important to know if RCs are an effective corporate governance mechanism in Indonesia, before they are mandated on all listed companies.…”

Section: Introductionmentioning

confidence: 99%

Remuneration committees, executive remuneration, and firm performance in Indonesia

Harymawan

Agustia

Nasih

et al. 2020

Heliyon

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Indonesia is currently in the process of mandating the establishment of Remuneration Committees (RCs) for all listed companies. However, little is known about the effectiveness of RCs in Indonesia. This study sheds light on this issue, by examining the relationships between RCs, executive and board of director remuneration, and firm performance in Indonesia. This study uses 847 observations of firms listed on the Indonesian Stock Exchange (IDX) during 2014-2017. Our results indicate that RCs are positively related to executives remuneration and firm performance. In particular, higher remuneration is only linked to higher performance in firms that have established a remuneration committee. This study documents the interactions between RCs, remuneration levels of senior company officers and firm performance in an emerging market setting with voluntary formation of RCs. This study has implications for regulators and company management in Indonesia (and other emerging markets), as the existence of remuneration committees is found to be associated with more effective remuneration packages and higher firm performance.

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The compensation of busy directors: An international analysis

Cited by 15 publications

References 47 publications

Directors’ Compensation. What Really Matters?

Directors’ Compensation. What Really Matters?

Limiting role of resource dependence: an examination of director interlocks, board meetings and family ownership

Remuneration committees, executive remuneration, and firm performance in Indonesia

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