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Relationship between top executive compensation and corporate governance: evidence from large Italian listed companies

Relationship between top executive compensation and corporate governance: evidence from large... The modernization of corporate governance aims the alignment of the interests of managers with those of companies, promoting a new discipline of internal controls and risk analysis with an enforcement of shareholder rights of information. This research investigates the impact of corporate governance variables—ownership, board of directors and remuneration committee—on executive compensation. A balanced sample of 52 Italian listed companies has been adopted to test the hypotheses, covering 55.98% and 47.13% of market capitalization in 2011 and 2015, respectively, and including 669 board members. Theoretical models evidence a certain stability of compensation schemes for Italian managers over time. Findings suggest that there is a statistically significant positive effect of familiar ownership on the amount of compensation. Along with the nature of ownership, the number of directors in the remuneration committee appointed by minorities assumes a determinant role. With statistical significance, it affects negatively the compensation level, but, contrarily to best practices, it affects negatively the adoption of forms of incentive compensation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Disclosure and Governance Springer Journals

Relationship between top executive compensation and corporate governance: evidence from large Italian listed companies

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References (52)

Publisher
Springer Journals
Copyright
Copyright © 2018 by Springer Nature Limited
Subject
Business and Management; Business and Management, general; Accounting/Auditing; Corporate Finance; Corporate Governance
ISSN
1741-3591
eISSN
1746-6539
DOI
10.1057/s41310-018-0050-2
Publisher site
See Article on Publisher Site

Abstract

The modernization of corporate governance aims the alignment of the interests of managers with those of companies, promoting a new discipline of internal controls and risk analysis with an enforcement of shareholder rights of information. This research investigates the impact of corporate governance variables—ownership, board of directors and remuneration committee—on executive compensation. A balanced sample of 52 Italian listed companies has been adopted to test the hypotheses, covering 55.98% and 47.13% of market capitalization in 2011 and 2015, respectively, and including 669 board members. Theoretical models evidence a certain stability of compensation schemes for Italian managers over time. Findings suggest that there is a statistically significant positive effect of familiar ownership on the amount of compensation. Along with the nature of ownership, the number of directors in the remuneration committee appointed by minorities assumes a determinant role. With statistical significance, it affects negatively the compensation level, but, contrarily to best practices, it affects negatively the adoption of forms of incentive compensation.

Journal

International Journal of Disclosure and Governance – Springer Journals

Published: Oct 26, 2018

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