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A Systematic Literature Review on Transparency in Executive Remuneration Disclosures and Their Determinants

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  • Tando O. Siwendu

    (School of Accountancy, Faculty of Economic and Management Sciences, University of the Free State, Bloemfontein 9330, South Africa)

  • Cosmas M. Ambe

    (School of Accountancy, Faculty of Economic and Management Sciences, University of the Free State, Bloemfontein 9330, South Africa)

Abstract

There are ongoing debates globally regarding excessive executive compensation, the perceived weak link between pay and performance, and the widening inequality gap. The South African corporate governance code King IV’s Principle 14 addresses the need for fair, responsible, and transparent remuneration. At the same time, the newly enacted Companies Amendment Act No. 16 of 2024 in South Africa emphasizes transparency in compensation, shareholder voting, and responding to shareholder feedback. This study conducts a systematic literature review of 30 articles on the transparency of executive remuneration disclosures and their determinants by analyzing Scopus-indexed articles published between 2010 and 2023, selected through specific keyword searches. The findings suggest an increasing focus on research regarding the disclosure of executive compensation, predominantly conducted in the Global North and primarily framed through agency theory. Studies exploring the factors influencing executive remuneration and the relationship between pay and performance are prevalent, with mixed results generally indicating a positive connection. Firm size emerges as a key factor in transparency, and many studies employ binary scoring to evaluate whether executive compensation disclosure is present. This paper provides valuable insights for investors, analysts, and policymakers and adds to the current understanding of executive remuneration transparency.

Suggested Citation

  • Tando O. Siwendu & Cosmas M. Ambe, 2024. "A Systematic Literature Review on Transparency in Executive Remuneration Disclosures and Their Determinants," JRFM, MDPI, vol. 17(10), pages 1-15, October.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:10:p:466-:d:1498095
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    References listed on IDEAS

    as
    1. Melis, Andrea & Gaia, Silvia & Carta, Silvia, 2015. "Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure," The British Accounting Review, Elsevier, vol. 47(1), pages 66-84.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. repec:eme:ijlma0:ijlma-02-2017-0020 is not listed on IDEAS
    4. repec:mir:mirfin:v:1:y:2014:i:1:p:44-54 is not listed on IDEAS
    5. Phillip C. James, 2014. "A Review of the Current Literature on Executive Compensation: New Insights and Understandings," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 2(2), pages 45-54, April.
    6. Denise Rousseau & Byeong Jo Kim & Ryan Splenda & Sarah Young & Jangbum Lee & Donna Beck, 2023. "Does chief executive compensation predict financial performance or inaccurate financial reporting in listed companies: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 19(4), December.
    Full references (including those not matched with items on IDEAS)

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