Directors' remuneration and performance in Australian banking

Doucouliagos, Hristos, Haman, Janto and Askary, Saeed 2007, Directors' remuneration and performance in Australian banking, Corporate governance : an international review, vol. 15, no. 6, pp. 1363-1383, doi: 10.1111/j.1467-8683.2007.00651.x.

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Title Directors' remuneration and performance in Australian banking
Author(s) Doucouliagos, HristosORCID iD for Doucouliagos, Hristos
Haman, Janto
Askary, Saeed
Journal name Corporate governance : an international review
Volume number 15
Issue number 6
Start page 1363
End page 1383
Publisher Wiley-Blackwell Publishing Ltd.
Place of publication Bognor Regis, England
Publication date 2007-11
ISSN 0964-8410
Keyword(s) corporate governance
directors' remuneration
bank performance
Summary This paper explores the relationship between directors' pay and performance within Australian banking, using panel data for the 1992-2005 period. The relationship between CEO pay and performance is investigated also. Several earnings models are estimated, using different dependent variables, alternate measures of performance and different estimation techniques. The results indicate an absence of a contemporaneous relationship between directors' pay and bank performance, and no association with prior year performance. However, there is a more distant pay-performance relationship, with total directors' pay having a robust positive association with earnings per share lagged two years, as well as with ROE lagged two years. The other key determinants of directors' pay in Australian banking are bank specific managerial policies, lags in the administration of pay, bank size, directors' age and directors' stock ownership. In contrast to total directors' pay, the evidence confirms a strong positive and direct association between CEO remuneration and prior year bank performance. The pay-performance association is stronger and more direct for CEO remuneration than it is for total directors' remuneration. The responsiveness of CEO pay with respect to bank performance appears to have increased over time.
Language eng
DOI 10.1111/j.1467-8683.2007.00651.x
Field of Research 140209 Industry Economics and Industrial Organisation
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2007, Wiley-Blackwell Publishing
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Document type: Journal Article
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School of Accounting, Economics and Finance
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