BOARD INFLUENCE ON THE MISALIGNMENT BETWEEN EXECUTIVE COMPENSATION AND ORGANIZATIONAL PERFORMANCE
DOI:
https://doi.org/10.4270/ruc.2023108Keywords:
Executive compensation, Board, Agency Theory, Corporate GovernanceAbstract
This study analyzes the board's influence on the misalignment between the company's financial and market performance and executive compensation. Secondary data from 181 companies listed on the B3 from 2010 to 2018 were analyzed using panel data regression. The results reveal that executive compensation, total and variable, is related to accounting and market performance, with part not explained by this, titled misaligned compensation. The findings denote that the board size aggravates the misalignment, while duality and independence do not influence it. Furthermore, the ratio between the number of directors and board size, which can increase the complexity of compensation contracts and the managerial power, also increases the misalignment. The results reveal worrying factors regarding the board's relationship with agency costs, emphasizing principal-agent misalignment, evaluated by executive compensation and the principal's interests in performance. Contributes by discussing the misalignment of executive compensation, presenting influences from board and directors, with highlights for the literature and organizations.
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