Directors’ compensation, ownership concentration and the value of the firm: evidence from an emerging market

Chee Liew, YoungKyung Ko (), Bee Lian Song () and Saraniah Thechina Murthy ()
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YoungKyung Ko: Sunway University
Bee Lian Song: Taylor’s University
Saraniah Thechina Murthy: Inti International College Subang

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2022, vol. 49, issue 1, No 7, 155-188

Abstract: Abstract We examine the association between directors’ compensation and firm value and investigate whether ownership concentration moderates this relationship by utilising a sample of Malaysian public-listed firms for the period from 2004 to 2014. Using fixed effect regression, we find that the remuneration of executive and non-executive directors is positively related to firm value. However, there is no conclusive evidence on the moderating effect of ownership concentration on the relationship between executive directors’ and non-executive directors’ compensation and firm value. Our findings indicate that executive and non-executive directors’ compensation packages should be linked to firm performance. The implication of this research addresses one of the key issues in corporate finance i.e., whether it is worth compensating directors in emerging markets or not.

Keywords: Directors’ compensation; Ownership concentration; Agency problem; Emerging markets; Firm value (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40812-022-00210-8

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