Board of Directors and Export Activity under a Controlling Shareholder System: Evidence from Italy

This paper considers the features of corporate management on the part of board of directors. This paper includes consideration of efficiency of decision-making, the resolution of conflicts be-tween shareholders, realizations of investment in the company. In the presented work are considered mutual relations between board of directors and shareholders, from the point of view of accepting of effective decisions. The author analyzes one of tools of motivation for board of directors, namely stock options as incentives for company executives which effective decisions help to make. Realiza-tion of stock options in the Russian legal realities at times is an inconvenient task. Besides, principal causes of infringement are considered from controlling shareholder: imperfection of the national corporate legislation, an inefficiency of governance from board of directors. The author notices that the company management is capable using the management powers, effectively to manage the com-pany, in due time to inform shareholders on forthcoming strategic business decisions. Thereby, al-lowing diligent to expect shareholders injurious moods from, first of all, majority shareholders and to permit corporate conflicts. The permission agency problem is reached by means of optimization of structure of the capital of the company. Thereby, the permission of an agency problem (at least its mitigation), will allow board of directors to make more effective decisions and also to promote in-vestment realization in the company. Eventually investors build the policy with the company on fi-duciary bases, giving a priority of that which copes strong management.

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Composition of the board of directors and pay-performance sensitivity

Revista Contabilidade & Finanças ◽

10.1590/1808-057x201806610 ◽

2019 ◽

Vol 30 (79) ◽

pp. 28-41 ◽

Cited By ~ 1

Author(s):

Isac de Freitas Brandão ◽

Alessandra Carvalho de Vasconcelos ◽

Márcia Martins Mendes De Luca ◽

Vicente Lima Crisóstomo

Keyword(s):

Corporate Governance ◽

Executive Compensation ◽

Board Of Directors ◽

Capital Market ◽

Agency Conflicts ◽

Governance Mechanism ◽

Executive Board ◽

Controlling Shareholder ◽

Performance Sensitivity ◽

The Board Of Directors

ABSTRACT This article investigates, in the Brazilian capital market, the effect of the composition of the board of directors on executive compensation sensitivity to market performance, known as pay-performance sensitivity (PPS). Due to potential agency conflicts between controlling and minority shareholders and between shareholders and managers, members of the board of directors of the executive board or those appointed by the controlling shareholder might have less independence, something which may compromise monitoring effectiveness and, consequently, reduce the PPS. The purpose is contributing to understand the agency conflicts that have taken place in the Brazilian capital market and to define the configuration of the monitoring and compensation mechanisms that minimize total agency costs, maximizing shareholders’ wealth. The research results have implications for understanding the agency relations and for corporate governance in the Brazilian capital market. It is concluded that the relation between the monitoring exercised by the board of directors and executive compensation is a condition for its effectiveness as a governance mechanism in the Brazilian capital market. Data within the period 2013-2015 from 92 companies that participate in the Brazil 100 Index (IBRX 100) of the São Paulo Stock, Mercantile & Futures Exchange (BM&FBOVESPA) were analyzed. In addition to tests of difference between mean values and correlation, estimates were processed through feasible generalized least squares modeling. The independence of the board of directors vis-à-vis the controlling shareholder and the executive board may work as a corporate governance mechanism supplementing executive compensation. The results of this study indicate that the proportion of executives and independent members in the board of directors reduces the PPS, a measurement for executive compensation effectiveness made operational by the contemporary relation between increased managers’ compensation and increased company’s market value.

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PENGARUH PEMEGANG SAHAM PENGENDALI TERHADAP KOMPENSASI DIREKSI DENGAN MEKANISME PEMEGANG SAHAM INSTITUSIONAL SEBAGAI VARIABEL PEMODERASI

Jurnal Benefita ◽

10.22216/jbe.v3i3.2489 ◽

2018 ◽

Vol 3 (3) ◽

pp. 315

Author(s):

Andre Bustari

Keyword(s):

Board Of Directors ◽

Financial Services ◽

Research Method ◽

Quantitative Method ◽

Listed Company ◽

Statistical Test ◽

Controlling Shareholder ◽

Controlling Shareholders ◽

The Board Of Directors ◽

Institutional Shareholders

Penelitian ini bertujuan untuk membuktikan pemegang saham pengendali terhadap kompensasi direksi dengan mekanisme pemegang saham institusional sebagai variabel pemoderasi. Sampel penelitian ini adalah 22 perusahaan yang menjadi emiten tetap terbesar termasuk kedalam Likuiditas 45 (LQ45) dari periode 2011 sampai dengan 2015. Metode penelitian yang digunakan adalah metode kuantitatif. Uji statistik yang gunakan dalam penelitian ini adalah Regresi Linear Berganda. Teori keagenan memperediksi bahwa pemegang saham pengendali berpengaruh positif terhadap kompensasi direksi. Hasil penelitian pertama tidak dapat membuktikan pengaruh pemegang saham pengendali terhadap kompensasi direksi dikarenakan fungsi pemegang saham pengendali dilaksanakan oleh Komite Independen sesuai yang diisyaratkan oleh peraturan-peraturan yang diterbitkan oleh Otorita Jasa Keuangan sehingga pemegang saham pengendali tidak mempengaruhi pemberian kompensasi kepada direksi. Hasil penelitian kedua tidak membuktikan pengaruh pemegang saham institusional dalam memperlemah pengaruh pemegang saham pengendali terhadap kompensasi direksi. Ini diduga pemegang saham institusional menilai pemberian kompensasi dan pengawasnya sudah dilaksanakan dengan adanya komite independen internal perusahaan. This study aims to prove the controlling shareholder to the compensation of the directors with the mechanism of institutional shareholders as a moderating variable. The sample of this research is 22 companies which become the biggest listed company including into Liquidity 45 (LQ45) from period 2011 to 2015. The research method used is quantitative method. The statistical test used in this study is Multiple Linear Regression. The agency theory predicts that the controlling shareholders positively influence the compensation of the board of directors. The results of the first study cannot prove the influence of the controlling shareholder on the compensation of the directors because the controlling shareholder function is carried out by the Independent Committee in accordance with the rules issued by the Financial Services Authority so that the controlling shareholder does not affect the compensation to the directors. The results of the second study do not prove the influence of institutional shareholders in weakening the influence of the controlling shareholder on the compensation of the directors. It is alleged that the institutional shareholders assess the compensation and the supervisor has been implemented with the company's internal independent committee.

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