The Determinants of Board Compensations: Evidence from Indonesia  

Oleh:

Darmadi, Salim

Jenis: Article from Journal - ilmiah internasional - terdaftar di DIKTI
Dalam koleksi: The Indonesian Journal of Accounting Research (Jurnal Riset Akuntansi Indonesia) vol. 14 no. 2 (May 2011), page 175-204.
Topik: Board Compensation; Corporate Governance; Indonesia; Pay-performance Sensitivity; Two-tier Board

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: RR17.9 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This paper examines the determinants of board compensation in a developing economy that adopts a twotier board structure system. Corporate governance structure, firm-specific characteristics, and firm performance are hypothesized as significant determinants. The sample consists of 442 firm-year observations, comprising 255 listed firms on the Indonesian Stock Exchange (IDX) in the financial years 2006 and 2007. I provide empirical evidence that profitability, firm size, and the number of board members are positively associated with the compensation level. Family-controlled firms are found to spend a higher proportion of their financial resources on compensating their board members, leading to a higher probability of agency problems in such firms. Further, this study investigates pay-performance sensitivity and reveals that changes in firm value are positively associated with changes in board compensation.

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