Determinants of directors’ remuneration packages among public listed companies: Malaysian evidence
Studies conducted on the basis of agency theory and the recent developments of the managerial power theory have triggered many issues especially centered on the corporate governance mechanisms. Thus, this paper aims to investigate the effect of key variables - corporate governance structures, corpor...
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| Format: | Thesis |
| Language: | eng eng |
| Published: |
2013
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| Subjects: | |
| Online Access: | https://etd.uum.edu.my/5104/1/s810222.pdf https://etd.uum.edu.my/5104/2/s810222_abstract.pdf |
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| Summary: | Studies conducted on the basis of agency theory and the recent developments of the managerial power theory have triggered many issues especially centered on the corporate governance mechanisms. Thus, this paper aims to investigate the effect of key variables - corporate governance structures, corporate performance, pay performance alignment policy and the use of remuneration consultants on directors' remuneration packages. The components of directors' remuneration packages tested are salary, fees, bonus, benefit-in-kind and other emoluments. The study also tests total
directors' remuneration to investigate any significant different in the regression results. The study controls the effect of firm size and sector. Fourty one Malaysian public listed companies are selected based on the
result from the survey conducted by the Minority Shareholder Watchdog Group (MSWG) and published in the Malaysian Corporate Governance
Report. Based on the multiple regression analysis, it is found that corporate governance structures - board size, board and remuneration committee independence and board diversity (gender and nationality) are significantly
affect individual component of directors' remuneration packages. However, the impact of board diversity (nationality) on total directors' remuneration is insignificant. Corporate performance does affect the determination of total directors' remuneration for the component of other emoluments. The study
also shows that companies that disclose pay performance alignment policy in the annual report do reward their directors according to what they declare with concentration on salary, fees and benefit-in-kind components without
significantly affect the total directors' remuneration. The use of remuneration consultants does influence the design of directors' remuneration packages. Finally, the results show that agency theory and managerial power theory is relevant in partially explaining the components of directors' remuneration packages in Malaysia |
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