Do Corporate Board Compensation Characteristics Influence the Financial Performance of Listed Companies?

摘要

As the financial performance of entities is of extreme importance to stakeholders in general and shareholders in particular (by helping to maintain a going concern and to increase the value of the business), it should appear as straightforward that identifying and analyzing those factors (determinants) that influence the financial performance is of great relevance both to practice and the academic world. It is logical (however not undisputed) to suppose that the managerial abilities of the board of directors would have a significant impact on the entity's financial performance. It is however not clear-cut whether certain board characteristics regarding its compensation would significantly influence the financial performance of the entity. Within this context, the aim of this research is to investigate (based on econometric regression models) the impact of 5 corporate governance characteristics related to board remuneration on the contemporaneous and next year's performance (measured as ROA/ROE) using a sample of large groups listed on the London Stock Exchange between 2010 and 2011. Through this study we intend to make a contribution to the academic literature on the unsettled issue concerning the relationship between corporate governance and corporate performance. The empirical results proved a significant relationship between non-executive directors’ basic fee, fees paid in shares and additional remuneration for board committee membership (as corporate board compensation characteristics) and both contemporaneous and subsequent financial firm performance.