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Gentlemen do not talk about money: Remuneration dispersion and firm performance relationship on British boards

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  • Zalewska, Anna

Abstract

Using a sample of 781 U.K. firms over the period 2000–2008 we study the relationship between remuneration dispersion at executive board level and firm performance. We find that this relationship is sensitive to nationality composition of the executive boards. In contrast with findings on American data, British companies are characterized by a negative dispersion–performance relationship, i.e., the greater the dispersion is, the worse firm performance is, however, boards with American CEOs or at least 30% of American nationality non-CEO executives are characterized by a positive dispersion–performance relationship. The results are robust when controlling for various firm, board and CEO characteristics, including cross-listing on U.S. exchanges and having sales in the U.S. Implications for executive remuneration reforms and board diversity are discussed.

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  • Zalewska, Anna, 2014. "Gentlemen do not talk about money: Remuneration dispersion and firm performance relationship on British boards," Journal of Empirical Finance, Elsevier, vol. 27(C), pages 40-57.
    • Handle: RePEc:eee:empfin:v:27:y:2014:i:c:p:40-57
    DOI: 10.1016/j.jempfin.2013.09.001
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    More about this item

    Keywords

    Executive compensation; Board diversity; Incentive pay; Firm performance;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

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