Abstract
This research examines the impact of the tenure of independent directors on senior executives’ compensation and corporate financial performance. We assume that as the term of tenure or seniority of directors usually defined as “independent” increases, their independence can become compromised because of the relationships they build with corporate executives. The results show that although the tenure of independent directors has a positive impact on senior executives’ compensation, it has no significant impact on corporate financial performance. This result tends to support the contention that seniority should be taken into account in studies using director’s independence as a variable
Subject
General Business, Management and Accounting
Reference24 articles.
1. Baranchuk, N. and Dybvig, P.H. (2009), "Consensus in diverse corporate boards", Review of Financial Studies, Vol. 22 No. 2, pp. 715-747.
2. Basu, S., Hwang, L-S., Mitsudome, T. and Weintrop, J. (2007), "Corporate governance, top executive compensation and firm performance in Japan", Pacific-Basin Finance Journal, Vol. 15, pp. 56-79.
3. Baysinger, B.D. and Butler, H.N. (1985), "Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition", Journal of Laws, Economics, & Organisation, Vol. 1 No. 1, pp. 101-124.
4. Bhagat, S. and Black, B. (2002), "The non-correlation between board independence and long-term performance", Journal of Corporate Law, Vol. 27 No. 2, pp. 231-273.
5. Broye, G. and Moulin, Y. (2010), "Rémunération des dirigeants et gouvernance des entreprises : le cas des entreprises françaises cotées", Finance Contrôle Stratégie, Vol. 13 No. 1, pp. 67-98.