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On the compensation and activity of corporate boards

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  • Nguyen, Nga Q.

Abstract

Within the nexus of contracts that makes up the firm, relatively little is known about the relationship between firms and their directors. Using a unique dataset comprising director compensation and activity, I find that firms use meeting fees and equity-based compensation as substitutes. In addition, paying directors for attending board/committee meetings is associated with more active boards and more active monitoring and advising committees. In contrast, a higher proportion of equity-based compensation is positively associated with monitoring activity but negatively associated with advising activity. Furthermore, more active boards and committees are paid more. Finally, I find that the variation in director compensation and activity generally reflects trade-offs between the costs and benefits of director effort, consistent with prior work.

Suggested Citation

  • Nguyen, Nga Q., 2014. "On the compensation and activity of corporate boards," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 1-19.
    • Handle: RePEc:eee:corfin:v:29:y:2014:i:c:p:1-19
    DOI: 10.1016/j.jcorpfin.2014.06.004
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    Cited by:

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    2. Hugo Gaillard & Dhikra Chebbi Nekhili & Mehdi Nekhili, 2024. "Employee Board Compensation Committee Membership: a contrasting appropriation by SBF120 firms? [La participation des représentants salariés au comité de rémunération : une appropriation contrastée ," Post-Print hal-04713094, HAL.
    3. Matteo P. Arena & Michaël Dewally & Sarah W. Peck, 2020. "Fight or flee: Outside director departures prior to contested management buyout offers," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(5), pages 274-293, September.
    4. Ryan Federo & Yuliya Ponomareva & Ruth V. Aguilera & Angel Saz‐Carranza & Carlos Losada, 2020. "Bringing owners back on board: A review of the role of ownership type in board governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(6), pages 348-371, November.
    5. Ibrahim M. Menshawy & Rohaida Basiruddin & Nor‐Aiza Mohd‐Zamil & Khaled Hussainey, 2023. "Strive towards investment efficiency among Egyptian companies: Do board characteristics and information asymmetry matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2382-2403, July.
    6. Saleh F. A. Khatib & Hamzeh Al Amosh & Husam Ananzeh, 2023. "Board Compensation in Financial Sectors: A Systematic Review of Twenty-Four Years of Research," IJFS, MDPI, vol. 11(3), pages 1-22, July.
    7. Balsam, Steven & Kwack, So Yean & Lee, Jae Young, 2017. "Network connections, CEO compensation and involuntary turnover: The impact of a friend of a friend," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 220-244.
    8. Sven-Olof Yrjö Collin & Yuliya Ponomareva & Sara Ottosson & Nina Sundberg, 2017. "Governance strategy and costs: board compensation in Sweden," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 685-713, September.
    9. Doan, Trang & Nguyen, Nga Q., 2018. "Boards of directors and firm leverage: Evidence from real estate investment trusts," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 109-124.

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    More about this item

    Keywords

    Corporate boards; Director compensation; Director activity; Contracting;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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