Published Online:October 2024
Product Name:The IUP Journal of Corporate Governance
Product Type:Article
Product Code:IJCG011024
Author Name:Mehtap Aldogan Eklund, Sergey Komissarov and Mehmet C Kocakulah
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:5-33
This paper examines the association between transparency in compensation disclosure and firm’s market performance under the moderating effects of corporate governance. Building on the body of literature connecting corporate governance, compensation disclosure and firm’s performance, the study hypothesized and found that corporate governance plays a moderating role in the relationship between compensation disclosure and firm’s market performance. The results were obtained using robust OLS model. The findings were corroborated using a 2SLS model as well and showed a positive association between compensation disclosure transparency and marketto- book value. CEO duality has an adverse effect on this positive relationship. The findings also showed a significant moderating effect of larger board sizes on the positive association between compensation disclosure transparency and market-tobook value. This study is the first one measuring the moderating effects of corporate governance on compensation disclosure and firm performance. The findings provide a plausible resolution for inconsistencies documented in extant literature regarding the nature of the relationship between compensation disclosure and firm’s performance.
This empirical study investigates the impact of higher transparency in compensation disclosure on a firm’s future market-related performance using data from Switzerland. It is an important topic because it examines potential consequences of voluntary or regulatory changes in compensation disclosure.