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Remuneration committees and attribution disclosures on remuneration decisions: Australian evidence
journal contribution
posted on 2019-09-01, 00:00 authored by Sutha KanapathippillaiSutha Kanapathippillai, Dessalegn Mihret, Shireenjit JohlThe use of remuneration committees (RCs) to foster corporate accountability concerning executive remuneration decisions
has attracted increasing public attention following various corporate scandals and the recent global fnancial crisis (GFC).
This study empirically examines the link between RCs and attributions disclosures, i.e. explanation of reasons for executive remuneration decisions. Using a sample of 644 firm-year observations drawn from top 200 Australian Securities Exchange (ASX)-listed firms from 2007 to 2011, we find that firms with RCs tend to voluntarily disclose attribution, and the extent of disclosures increases with remuneration committee quality. While existence of attribution disclosures is related to pay performance sensitivity, the extent of disclosures does not show incremental effect on pay-performance sensitivity. The results also show that the presence and quality of RCs are positively associated with internal attribution disclosures regarding executive remuneration decisions during the GFC, suggesting corporate responsiveness to corporate accountability demands at times of economic crisis.
has attracted increasing public attention following various corporate scandals and the recent global fnancial crisis (GFC).
This study empirically examines the link between RCs and attributions disclosures, i.e. explanation of reasons for executive remuneration decisions. Using a sample of 644 firm-year observations drawn from top 200 Australian Securities Exchange (ASX)-listed firms from 2007 to 2011, we find that firms with RCs tend to voluntarily disclose attribution, and the extent of disclosures increases with remuneration committee quality. While existence of attribution disclosures is related to pay performance sensitivity, the extent of disclosures does not show incremental effect on pay-performance sensitivity. The results also show that the presence and quality of RCs are positively associated with internal attribution disclosures regarding executive remuneration decisions during the GFC, suggesting corporate responsiveness to corporate accountability demands at times of economic crisis.
History
Journal
Journal of business ethicsVolume
158Issue
4Pagination
1063 - 1082Publisher
Springer VerlagLocation
Dordrecht, the NetherlandsPublisher DOI
ISSN
0167-4544Language
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2017, Springer Science+Business Media B.V., part of Springer NatureUsage metrics
Categories
No categories selectedKeywords
AttributionAccountabilityCorporate governanceExecutive remuneration disclosureGlobal financial crisisRemuneration committeeSocial SciencesBusinessEthicsBusiness & EconomicsSocial Sciences - Other TopicsEXECUTIVE-COMPENSATIONIMPRESSION MANAGEMENTVOLUNTARY DISCLOSUREEARNINGS MANAGEMENTBOARDPERFORMANCEQUALITYOWNERSHIPFIRM