Does board interlock affect CEO compensation? Evidence from companies listed in the Brazilian stock exchange

Claudine Salgado (), Guilherme Schneider () and Cristiano M. Costa ()
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Claudine Salgado: Heriot-Watt University
Guilherme Schneider: Universidade Federal Do Rio Grande Do Sul
Cristiano M. Costa: Universidade Do Vale Do Rio Dos Sinos

International Journal of Disclosure and Governance, 2022, vol. 19, issue 4, No 6, 444-465

Abstract: Abstract This study investigates the effects of board interlock on CEO compensation. We use an ordinary least square (OLS) for panel data approach and Social Network Analysis (SNA) procedures on a sample of 275 companies listed on the Brazilian stock exchange (B3), from 2011 to 2018, to evaluate the effects of board interlocks frameworks and some peculiarities of the Brazilian market on CEO compensation. Our empirical findings are twofold. First, our results indicate that the higher the board interlock level, the higher CEO compensation in the companies covered by our study. Second, the interlocks within business groups in the Brazilian market did not act as a moderator in the relationship between board interlock and CEO compensation, which indicates that the interlocks formed between companies listed on B3 are mostly between companies from different businesses groups. Overall, our study supports the perspectives of the agency and managerial power theories regarding the board of directors' role in setting the CEO compensation package and the issues that can influence this duty.

Keywords: CEO compensation; Board interlock; Board of directors; Business groups (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41310-022-00159-z

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