Corporate governance, executive pay and firm performance: evidence from Bangladesh

Article

Rashid, Afzalur. 2013. "Corporate governance, executive pay and firm performance: evidence from Bangladesh." International Journal of Management. 30 (2), pp. 556-575.
Article Title

Corporate governance, executive pay and firm performance: evidence from Bangladesh

ERA Journal ID19166
Article CategoryArticle
Authors
AuthorRashid, Afzalur
Journal TitleInternational Journal of Management
Journal Citation30 (2), pp. 556-575
Number of Pages20
Year2013
Place of PublicationPoole, United Kingdom
ISSN0813-0183
Web Address (URL)http://www.internationaljournalofmanagement.co.uk/
Abstract

This study examines the relationship between executive pay and firm performance in
Bangladesh. While doing so it examines the ownership structure and board practices
on executive pay and pay-performance sensitivity. It is found that there is no significant
relationship between ownership structure and executive pay. There is a significant positive
relationship between board composition and executive pay; there is a significant negative
relationship between board size and executive pay and CEO duality and executive pay.
However, there is a positive relationship between executive pay and firm performance.
These findings imply that the executives who have significant ownership stakes in the
firm are not necessarily extracting rent in the form of executive pay even though they
have a consolidation of powers (CEO duality). Insider representation in the board and
management along with the consolidation of powers may have reduced the need for
performance related pay and their monitoring skill may have allowed enhancing firm
economic performance.

KeywordsAgency Theory, Bangladesh, Compensation, Corporate Governance, Insider Ownership, Rent Extraction, Stewardship Theory
ANZSRC Field of Research 2020350799. Strategy, management and organisational behaviour not elsewhere classified
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Byline AffiliationsSchool of Accounting, Economics and Finance
Institution of OriginUniversity of Southern Queensland
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