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Does corporate governance affect CEO compensation in Indian manufacturing firms?
Author(s) -
Patnaik Pooja,
Suar Damodar
Publication year - 2020
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.2115
Subject(s) - corporate governance , executive compensation , compensation (psychology) , accounting , business , affect (linguistics) , independence (probability theory) , finance , psychology , statistics , mathematics , communication , psychoanalysis
This study examines the effects of (a) chief executive officers (CEO) pay dynamics, (b) corporate governance characteristics, and (c) the impact of environmental, social, and governance disclosure practices on CEO compensation. Data of 282 Indian manufacturing firms were collected from Bloomberg database from 2013–14 to 2018–19. This study uses Generalized Method of Moments estimation technique to assess the impact of corporate governance on CEO compensation. The empirical estimates reveal that increase in board size, board independence, women director in board, CEO duality, and institutional holdings reduced CEO compensation. Furthermore, the environmental, social, and governance disclosure confirmed that higher firm disclosures help to streamline CEO compensation. It has also been found that CEOs' current compensation is affected by their previous pay. This study corroborates the objectives of Companies Act 2013 to streamline the governance practices for optimizing CEO compensation.