Abstracts
Abstract
This study examines the impact of board governance mechanisms on the pay of Chief Executive Officers (CEOs) using a sample of major French listed companies for the 2009–2011 period. The results show that CEO pay is negatively associated with the presence of a family CEO and positively associated with board size, busy directors, board meetings, and compensation committee independence. We provide further evidence that CEO compensation increases with firm size, and both present and past performance. Our study casts doubt on the effectiveness of formal board attributes in constraining CEO compensation.
Keywords:
- Board of directors,
- CEO compensation,
- corporate governance,
- agency conflicts
Résumé
Cette étude examine l’impact des mécanismes de gouvernance sur la rémunération du Président Directeur Général (PDG) sur un échantillon de grandes sociétés françaises cotées sur la période 2009-2011. Les résultats montrent que la rémunération du PDG est négativement associée à la présence de sa famille et positivement associée à la taille du conseil d’administration, au cumul des mandats, au nombre de réunions du conseil, et à l’indépendance du comité de rémunération. La rémunération augmente également avec la taille de l’entreprise et sa performance passée et présente. Notre étude questionne l’efficacité des attributs formels du conseil à limiter la rémunération du PDG.
Mots-clés :
- Conseil d’administration,
- rémunération des dirigeants,
- gouvernance des entreprises,
- conflits d’agence
Resumen
Este estudio examina los efectos que diferentes mecanismos de gobierno tienen sobre la remuneración del presidente y director ejecutivo (PDE) usando una muestra de grandes empresas francesas cotizadas en el periodo 2009-2011. Los resultados muestran que la remuneración del PDE tiene una asociación negativa con la presencia en el consejo de miembros de la familia del directivo y positiva con el tamaño del consejo de administración, la acumulación de mandatos, el número de reuniones del consejo, y la independencia del comité de remuneración. Nuestros resultados también muestran que la remuneración de los ejecutivos aumenta con el tamaño de la empresa y su desempeño pasado y presente. Nuestro estudio plantea dudas sobre la eficacia de ciertas características formales del consejo para limitar la compensación du PDE.
Palabras clave:
- Consejos de administración,
- remuneración de los dirigentes,
- gobierno corporativo,
- conflictos de agencia
Appendices
Bibliography
- Ali, A.; Chen, T.-Y.; Radhakrishnan, S. (2007). “Corporate disclosures by family firms”, Journal of Accounting and Economics, Vol. 44, N°. 1-2, p. 238-286.
- Allemand, I.; Brullebaut, B. (2014). “Le capital humain des femmes récemmen nommées dans les conseils d’administration des sociétés françaises cotées à Paris”, Human capital of women directors recently appointed in French listed companies., Vol. 18, N°. 3, p. 20-31.
- Armstrong, C.; Ittner, C.; Larcker, D. (2012). “Corporate governance, compensation consultants, and CEO pay levels”, Review of Accounting Studies, Vol. 17, N°. 2, p. 322-351.
- Bantel, K.A.; Jackson, S.E. (1989). “Top management and innovations in banking: Does the composition of the top team make a difference?”, Strategic Management Journal, Vol. 10, p. 107-124.
- Bebchuk, L.A.; Fried, J.M. (2003). “Executive Compensation as an Agency Problem”, Journal of Economic Perspectives, Vol. 17, N°. 3, p. 71-92.
- BenAli, C.; Lesage, C. (2013). “Les auditeurs financiers face aux conflits d’agence: une étude des déterminants des honoraires d’audit en France”, Comptabilité - Contrôle - Audit, Vol. 19, N°. 1, p. 59-89.
- BenAli, C.; Lesage, C. (2014). “Audit Fees in Family Firms: Evidence From U.S. Listed Companies”, Journal of Applied Business Research, Vol. 30, N°. 3, p. 807-816.
- Bennani, Z.; Hecker, J.X. (2014). “Executive compensation: a comparative study of practices and regulations”, Paris, Mirova Edition, 52 p.
- Berle, A. A.; G. C. Means. 1932. The modern corporation and private property. New York, MacMillan edition, 380 p.
- Brickley, J.A.; Linck, J.S.; Coles, J.L. (1999). “What happens to CEOs after they retire? New evidence on career concerns, horizon problems, and CEO incentives”, Journal of Financial Economics, Vol. 52, N°. 3, p. 341-377.
- Broye, G.; Moulin, Y. (2010). “Rémunération des dirigeants et gouvernance des entreprises: le cas des entreprises françaises cotées”, Finance - Contrôle - Stratégie, Vol. 13, N°. 1, pp. 67-99.
- Cai, J.; Walkling, R.A. (2011). “Shareholders’ Say on Pay: Does It Create Value?”, Journal of Financial; Quantitative Analysis, Vol. 46, N°. 2, p. 299-339.
- Chau, G.; Gray, S.J. (2010). “Family ownership, board independence and voluntary disclosure: Evidence from Hong Kong”, Journal of International Accounting, Auditing and Taxation, Vol. 19, N°. 2, p. 93-109.
- Chen, C.J.P.; Jaggi, B. (2000). “Association between independent non-executive directors, family control and financial disclosures in Hong Kong”, Journal of Accounting and Public Policy, Vol. 19, p. 285-310.
- Cheung, Y.L.; Stouraitis, Y., A.; Wong, A.W.S. (2005). “Ownership concentration and executive compensation in closely held firms: Evidence from Hong Kong”, Journal of Empirical Finance, Vol. 12, p. 511-532.
- Chhaochharia, V.; Grinstein, Y. (2009). “CEO Compensation and Board Structure”, Journal of Finance, Vol. 64, N°. 1, p. 231-261.
- Core, J.E.; Holthausen, R.W.; Larcker, D.F. (1999). “Corporate governance, chief executive officer compensation, and firm performance”, Journal of Financial Economics, Vol. 51, N°. 3, p. 371-406.
- Donnelly, R.; Mulcahy, M. (2008). “Board Structure, Ownership, and Voluntary Disclosure in Ireland”, Corporate Governance: An International Review, Vol. 16, N°. 5, p. 416-429.
- Duffhues, P.; Kabir, R. (2008). “Is the pay–performance relationship always positive?: Evidence from the Netherlands”, Journal of Multinational Financial Management, Vol. 18, N°. 1, pp. 45-60.
- Faccio, M.; Lang, L.H.P. (2002). “The ultimate ownership of Western European corporations”, Journal of Financial Economics, Vol. 65, N°. 3, p. 365-395.
- Fama, E.F.; Jensen, M.C. (1983). “Separation of Ownership and Control”, Journal of Law and Economics, Vol. 26, p. 301-325.
- Ferris, S.P.; Jagannathan, M.; Pritchard, A.C. (2003). “Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments”, Journal of Finance, Vol. 58, N°. 3, p. 1087-1111.
- Fich, E.M.; Shivdasani, A. (2006). “Are Busy Boards Effective Monitors?”, Journal of Finance, Vol. 61, N°. 2, p. 689-724.
- Field, L.; Lowry, M.; Mkrtchyan, A. (2013). “Are busy boards detrimental?”, Journal of Financial Economics, Vol. 109, N°. 1, p. 63-82.
- Gabaix, X.; Landier, A. (2008). “Why has CEO pay increased so much?”, Quarterly Journal of Economics, Vol. 123, N°. 1, p. 49-100.
- Goldberg, L.G.; Idson, T.L. (1995). “Executive compensations and agency effects”, Financial Review, Vol. 30, N°. 2, p. 313-335.
- Gulamhussen, M.A.; Santos, S.M. (2010). “Women in Bank Boardrooms and Their Influence on Performance and Risk-Taking”, SSRN Working paper, April 6, p. 1-52.
- Guthrie, K.; Sokolowsky, J.A.N.; Wan, K.-M. (2012). “CEO Compensation and Board Structure Revisited”, Journal of Finance, Vol. 67, No. 3, p. 1149-1168.
- Ho, J.L.; Fei, K. (2013). “Auditor Choice and Audit Fees in Family Firms: Evidence from the S&P 1500”, Auditing, Vol. 32, N°. 4, p. 71-93.
- Ho, S.; Wong, K.S. (2001). A study of the relationship between corporate governance structures and the extent of voluntary disclosure. Journal of International Accounting, Auditing; Taxation, Vol. 10, N°. 2, p. 139-156.
- Hollandts, X.; Borodak, D.; Tichit, A. (2015). “Plus autonome? L’évolution des structures de gouvernance des sociétés cotées françaises (1997-2008)”, Management International Review, Vol. 13, N°. 3, p. 47-64.
- Huang, P.; Ryan, H.E.; Wiggins, R.A. (2007). “The influence of firm-and CEO-specific characteristics on the use of nonlinear derivative instruments”, Journal of Financial Research, Vol. 30, N°. 3, p. 415-436.
- HweiCheng, W., Venezia, C.C.; Yung, I.L. (2013). Determinants of chief executive officer compensation. International Journal of Business; Finance Research (IJBFR), Vol. 7, N°. 4, pp. 29-42.
- Jaggi, B.; Leung, S. (2007). “Impact of family dominance on monitoring of earnings management by audit committees: Evidence from Hong Kong”, Journal of International Accounting, Auditing; Taxation, Vol. 16, N°. 1, p. 27-50.
- Jensen, M.; Meckling, W. (1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure”, Journal of Financial Economics, Vol. 3, N°. 4, p. 305-360.
- Jensen, M.C. (1993). “The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems”, Journal of Finance, Vol. 48, N°. 3, p. 831-880.
- Jiraporn, P.; Singh, M.; Lee, C.I. (2009). “Ineffective corporate governance: Director busyness and board committee memberships”, Journal of Banking; Finance, Vol. 33, N°. 5, p. 819-828.
- Kaplan, S.N.; Reishus, D. (1990). “Outside directorships and corporate performance”, Journal of Financial Economics, Vol. 27, N°. 2, p. 389-410.
- Kramartz, F.; Thesmar, D. (2007). “Networks in the Boardroom”, CPER Working, Vol. 5496.
- Krause, R.; Whitler, K.A.; Semadeni, M. (2014). “Power to the Principals! An Experimental Look at Shareholder Say-On-Pay Voting”; Academy of Management Journal, Vol. 57, N°. 1, pp. 94-115.
- LaPorta, R.; Lopez-de-Silanes, F.; Shleifer, A. (1999). “Corporate Ownership Around the World”, Journal of Finance, Vol. 54, N°. 2, p. 471-517.
- Lipton, M.; Lorsch, J.W. (1992). “A modest proposal for improved corporate governance”, Business Lawyer., Vol. 48, N°. 1, p. 59-77.
- Mishra, C.S.; Nielsen, J.F. (2000). “Board Independence and Compensation Policies in Large Bank Holding Companies”, Financial Management (Wiley-Blackwell), Vol. 29, N°. 3, p. 51.
- Nielsen, S.; Huse, M. (2010). “Women directors’ contribution to board decision-making and strategic involvement: The role of equality perception”, European Management Review, Vol. 7, N°. 1, p. 16-29.
- Pathan, S.; Faff, R. (2013). “Does board structure in banks really affect their performance?”, Journal of Banking; Finance, Vol. 37, No. 5, pp. 1573-1589.
- Ozkan, N. (2011). “CEO Compensation and Firm Performance: an Empirical Investigation of UK Panel Data”, European Financial Management, Vol. 17, N°. 2, p. 260-285.
- Pochet, C.; Yeo, H. (2004). “Les comités spécialisés des entreprises françaises cotées: mécanismes de gouvernance ou simples dispositifs esthétiques?”, Comptabilité Contrôle Audit, Vol. 10, N°. 2, p. 31-54.
- Shleifer, A.; Vishny, R.W. (1997). “A Survey of Corporate Governance”, Journal of Finance, Vol. 52, N°. 2, p. 737-783.
- Vafeas, N. (1999). “Board meeting frequency and firm performance”, Journal of Financial Economics, Vol. 53, N°. 1, pp. 113-142.
- Wilson, J.; Thomas, E. (2010). “Females and financial experts: board diversity in the ERA of the SEC’s audit committee requirements”, Academy of Accounting; Financial Studies Journal, Vol. 14, N°. 4, pp. 1-10.
- Xie, B.; Davidson Iii, W.N.; DaDalt, P.J. (2003). “Earnings management and corporate governance: the role of the board and the audit committee”, Journal of Corporate Finance, Vol. 9, N°. 3, pp. 295-316.
- Yermack, D. (1996). “Higher market valuation of companies with a small board of directors”, Journal of Financial Economics, Vol. 40, N°. 2, pp. 185-211.