To pay or not pay: Board remuneration and insolvency risk in credit unions

Luisa A. Unda and Dinithi Ranasinghe

Pacific-Basin Finance Journal, 2021, vol. 66, issue C

Abstract: This study examines the effect of board of directors' pay on insolvency risk in Australian credit unions. We find that both voluntary boards and highly-paid boards are more likely to reduce insolvency risk. Board remuneration has two distinct effects on insolvency risk, depending on the size of the credit union. For small credit unions, volunteer boards are associated with less probability of insolvency risk; while for large credit unions, highly paid boards are associated with less probability of insolvency risk. Board diligence is also a significant determinant in reducing insolvency risk in the credit union setting. This study demonstrates the significance of the efficiency wage hypothesis and informs regulatory debate on voluntary boards and board remuneration, around risk oversight.

Keywords: Board remuneration; Insolvency risk; Credit unions; Corporate governance (search for similar items in EconPapers)
JEL-codes: G21 G32 G34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X17305747
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:66:y:2021:i:c:s0927538x17305747

DOI: 10.1016/j.pacfin.2019.03.005

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().