Effect of board independence on incentive compensation and compensation disclosure : evidence from Europe
Name
64552087-MIT.pdf
Description
Full printable version
Size
4.73 MB
Format
Adobe PDF
Checksum (MD5)
09f360619af700f19abead7091a80045
Author(s)
Muslu, Volkan
Advisor(s)
S.P. Kothari.
Date Issued
2005
Publisher
Massachusetts Institute of Technology
Abstract
My thesis examines how the lack of board-of-director independence affects the structure and disclosure of executive compensation. I find that European companies with more insiders on their boards grant their executives more incentive compensation, after controlling for the level and economic determinants of executive compensation. This effect is more pronounced in countries with less protection for outside shareholders. The companies with more insiders on their boards also disclose more transparent information about executive compensation. Overall, my evidence supports the contracting hypothesis, in which capital market investors understand potential detrimental effects of insiders and drive companies to mitigate these effects through greater incentive compensation and improved compensation disclosure. The evidence is inconsistent with the opportunism hypothesis, in which risk-averse insiders grant themselves more fixed pay and disclose less transparent information about their compensation.
Description
Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2005.
Includes bibliographical references (leaves 39-42).
Subjects
Sloan School of Management.
MIT Department
Sloan School of Management
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