Corporate Governance and CEO Compensation in Indian Firms

Journal of Contemporary Accounting and Economics, Forthcoming

Posted: 22 Jun 2016

See all articles by Sudhir S. Jaiswall

Sudhir S. Jaiswall

Finance & Control Group, Indian Institute of Management Calcutta

Asish K. Bhattacharyya

Nonlinear Insights ; Shiv Nadar University; Shiv Nadar University

Date Written: June 8, 2016

Abstract

We examine the role of the board, ownership, and CEO characteristics in CEO compensation in Indian firms. Contrary to the evidence documented in prior studies, we find that CEO compensation is not associated with board characteristics. Instead, compensation is associated with firm’s ownership attributes and its CEO’s tenure. We also document that leaving out CEO fixed effects in a longitudinal compensation study can lead to potentially erroneous conclusions about the role of several governance attributes in CEO compensation contracting. Finally, we find that CEO compensation attributed to ownership characteristics in the private sector is positively related to future firm performance, whereas remuneration attributed to board and CEO characteristics in both private and public sectors are not. Our evidence is consistent with efficient CEO compensation contracting, rather than CEO rent extraction, in Indian firms.

Keywords: CEO compensation, corporate governance, ownership structure, board, public and private sector, India

JEL Classification: M52, G32, G34, C23

Suggested Citation

Jaiswall, Sudhir Shiv Kumar and Bhattacharyya, Asish K., Corporate Governance and CEO Compensation in Indian Firms (June 8, 2016). Journal of Contemporary Accounting and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2797904

Sudhir Shiv Kumar Jaiswall (Contact Author)

Finance & Control Group, Indian Institute of Management Calcutta ( email )

DIAMOND HARBOR ROAD
JOKA
KOLKATA, 700104
India

HOME PAGE: http://https://www.iimcal.ac.in/users/sudhir

Asish K. Bhattacharyya

Nonlinear Insights ( email )

Flat 708, Tower 6, Narmada
D 6 Vasant Kunj
New Delhi, 110070
India
91 8527300499 (Phone)

HOME PAGE: http://nonlinear-insights.com

Shiv Nadar University ( email )

Shiv Nadar University ( email )

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