Social elites on the board and executive pay in developing countries: Evidence from Africa

Bruce Hearn, Roger Strange and Jenifer Piesse

Journal of World Business, 2017, vol. 52, issue 2, 230-243

Abstract: This study applies a new multi-focal actor-centered institution-theoretic approach to examine the association between executive pay and the recruitment of social elites to the board of directors in developing countries. We use a sample of 119 initial public offerings (IPOs) from 17 African stock markets to model this relationship. The results suggest that a higher proportion of elites on the board is associated with lower executive pay. This is moderated by institutional quality; that is, lower institutional quality is associated with more directors drawn from social elites and with higher pay, while the opposite is true in higher-institutional-quality environments. Our findings confirm the importance of the social environment within which governance is embedded.

Keywords: Salary; IPO; Political economy; Social elites; Emerging economies; Africa (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:52:y:2017:i:2:p:230-243

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DOI: 10.1016/j.jwb.2016.12.004

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