Determination of Executive Compensation in an Emerging Economy: Evidence from India
نویسندگان
چکیده
Most of the studies regarding the determination of executive compensation are based on developed countries and mainly focused on CEO compensation. Determination of board compensation is relatively ignored in the literature. This paper examines the effect of corporate governance, firm performance and corporate diversification on board as well as CEO compensation and its components in the context of an emerging economy, India, where managerial market is yet to develop. I use panel data of 462 firms from the year 1997-2002 of Indian manufacturing sector. This paper finds that board compensation largely depend on current and past year firm performance and diversification, whereas CEO compensation depends only on current year firm performance. Among the personal attributes of the CEO, only in-firm experience has significant influence on CEO compensation. This finding contradicts the extant studies, where current and past year firm performance, age, experience and education of the CEO are important factors for determining CEO compensation. JEL classification: J33, G30, L25
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Determination of Board and CEO Compensation in Emerging Economy: Evidence from India
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