Author:
Alfawareh Faraj Salman,Che Johari Edie Erman,Ooi Chai-Aun
Abstract
Purpose
This paper aims to investigate the effect of governance mechanisms and firm performance on chief executive officer (CEO) compensation in relation to the Jordanian business environment. This study also examines the moderating role of gender diversity.
Design/methodology/approach
The sample is drawn from the annual reports of 68 Jordanian firms between 2015 and 2019. This paper uses the ordinary least square regression. It also uses the generalised method of moments approach to control any endogeneity issue and analyses the data in depth. In addition, it uses a dynamic model to address concerns regarding causality in the study’s models.
Findings
The results show that governance mechanisms and firm performance have an impact on CEO compensation. Furthermore, the outcomes indicate that gender diversity significantly and positively moderates the association between firm performance and CEO compensation. These findings enhance and support agency theory in the context of Jordan.
Practical implications
The study’s results have significant implications for policymakers, shareholders, investors, academicians and the public in the developing Jordanian market. The findings also support more monitoring and inspection to prevent the occurrence of opportunistic management behaviour and ensure that CEO remuneration packages are appropriately designed.
Originality/value
This study provides a unique understanding by explaining the impact of governance and performance on CEO compensation in a developing country such as Jordan. Besides that, the current study extends prior studies in Jordan significantly.
Subject
Economics, Econometrics and Finance (miscellaneous),Accounting,Management Information Systems
Reference110 articles.
1. Chief executive officer compensation, corporate governance and performance: evidence from KSA firms;Corporate Governance: The International Journal of Business in Society,2019
2. The effect of executive compensation on financial performance in Egypt;OALib,2019
3. Women in the boardroom and their impact on governance and performance;Journal of Financial Economics,2009
4. Interactive effects of executive compensation, firm performance and corporate governance: evidence from an Asian market;Asia Pacific Journal of Management,2019
5. The relationship between capital structure and performance of non-financial firms listed in Amman Stock Exchange;Research Journal of Finance and Accounting,2021
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献