Social Elites on the Board and Executive Pay in Developing Countries: Evidence from Africa

Hearn, B., Strange, R., & Piesse, J. (2017). Social Elites on the Board and Executive Pay in Developing Countries: Evidence from Africa. Journal of World Business, 52(2), 230-243

43 Pages Posted: 9 Feb 2022

See all articles by Bruce Allen Hearn

Bruce Allen Hearn

University of Southampton; University of Bradford - School of Management

Roger Strange

University of Sussex

Jenifer Piesse

University of Stellbosch; King's College London - Department of Management

Date Written: February 9, 2017

Abstract

This study applies a new multi-focal actor-centered institution-theoretic approach to examine the association between executive pay and the recruitment of social elites to the board of directors in developing countries. We use a sample of 119 initial public offerings (IPOs) from 17 African stock markets to model this relationship. The results suggest that a higher proportion of elites on the board is associated with lower executive pay. This is moderated by institutional quality; that is, lower institutional quality is associated with more directors drawn from social elites and with higher pay, while the opposite is true in higher-institutional-quality environments. Our findings confirm the importance of the social environment within which governance is embedded.

Keywords: Salary, IPO, Political Economy, Social Elites, Emerging Economies, Africa

Suggested Citation

Hearn, Bruce Allen and Strange, Roger Nicholas and Piesse, Jenifer, Social Elites on the Board and Executive Pay in Developing Countries: Evidence from Africa (February 9, 2017). Hearn, B., Strange, R., & Piesse, J. (2017). Social Elites on the Board and Executive Pay in Developing Countries: Evidence from Africa. Journal of World Business, 52(2), 230-243 , Available at SSRN: https://ssrn.com/abstract=4030676

Bruce Allen Hearn (Contact Author)

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

University of Bradford - School of Management ( email )

Emm Lane
Bradford, West Yorkshire Bd9 4JL
United Kingdom

Roger Nicholas Strange

University of Sussex ( email )

School of Business, Management and Economics
Mantell Building
Brighton, Sussex BN1 9RF
United Kingdom
(44)1273-873531 (Phone)

Jenifer Piesse

University of Stellbosch

Stellenbosch, Western Cape
South Africa

King's College London - Department of Management ( email )

Virginia Woolf Building
22 Kingsway
London, England WC2B 6NR
United Kingdom

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