TY - JOUR
T1 - EC
T2 - board compensation and firm performance: The role of "independent" board members
AU - Fernandes, Nuno
N1 - Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2008/2
Y1 - 2008/2
N2 - We use data from the Portuguese Stock Market to examine the link between firm performance, board structure, and top executive pay. We examine whether the governance structure of companies influences top executive pay. Specifically, we consider the role of nonexecutive board members as mediators of the management-shareholder relationship. Our results cast doubt on the effectiveness of independent board members. Firms with more nonexecutive board members pay higher wages to their executives. Furthermore, we find that firms with zero nonexecutive board members actually have fewer agency problems and achieve a better alignment of shareholders' and managers' interests.
AB - We use data from the Portuguese Stock Market to examine the link between firm performance, board structure, and top executive pay. We examine whether the governance structure of companies influences top executive pay. Specifically, we consider the role of nonexecutive board members as mediators of the management-shareholder relationship. Our results cast doubt on the effectiveness of independent board members. Firms with more nonexecutive board members pay higher wages to their executives. Furthermore, we find that firms with zero nonexecutive board members actually have fewer agency problems and achieve a better alignment of shareholders' and managers' interests.
KW - Corporate governance
KW - Executive compensation
KW - Independent directors
UR - http://www.scopus.com/inward/record.url?scp=37449007710&partnerID=8YFLogxK
U2 - 10.1016/j.mulfin.2007.02.003
DO - 10.1016/j.mulfin.2007.02.003
M3 - Article
AN - SCOPUS:37449007710
SN - 1042-444X
VL - 18
SP - 30
EP - 44
JO - Journal of Multinational Financial Management
JF - Journal of Multinational Financial Management
IS - 1
ER -