Influence of the Board and Ownership Concentration on the Misalignment between Executive Compensation and Performance

• Autor(a) principal: Marquezan, Luiz Henrique Figueira
• Data de Publicação: 2023
• Outros Autores: Velho, Maria Laura Pereira, Souza, Fernanda Severo de, Degenhart, Larissa
• Tipo de documento: Artigo
• Idioma: eng; por
• Título da fonte: Contabilidade, Gestão e Governança
• Texto Completo: https://revistacgg.org/index.php/contabil/article/view/3063
• topic: Agency Theory; Corporate governance; Executive Compensation; Board; Shareholding Concentration; Teoria da Agência; Governança Corporativa; Remuneração Executiva; Conselho de Administração; Concentração Acionária

Objective: Analyze the influence of the board and ownership concentration on the misalignment between executive compensation and performance. Method: Descriptive and quantitative research using secondary data from 196 companies listed on B3 – Brazil Stock Exchange and Over-the-Counter Market between 2010 and 2021, treated by panel data regression. Originality/Relevance: Generally, studies assess the relationship and sensitivity between the level of remuneration and performance; this study advances by addressing determinants and investigating factors capable of affecting the portion of remuneration that is not explained by performance, which may be disconnected from a direct contribution to shareholders. Results: The main results indicate that more extensive and independent boards have difficulty defining remuneration packages as they increase levels of misaligned remuneration. Likewise, more directors concerning advisors increase misalignment, increasing agency costs. Regarding shareholding concentration, the results highlight the importance of not being concentrated on the first two shareholders, as their monitoring could not reduce the problem of misalignment. Theoretical/methodological contributions: Contributes to identifying risks for companies linked to more extensive and independent boards and the more significant number of executives per board member, as they aggravate the principal-agent problem. Provides evidence that increased ownership by a third significant shareholder can promote alignment of interests. In this way, it contributes to decisions to improve the structure and governance processes.