IDEAS home Printed from https://ideas.repec.org/a/jda/journl/vol.49year2015issue5pp225-237.html
   My bibliography  Save this article

It Pays to Be an Executive in Malaysia

Author

Listed:
  • Zahiruddin Ghazali
  • Fauziah Md. Taib

    (School of Economics, Finance and Banking, Universiti Utara Malaysia
    School of Management, Universiti Sains Malaysia)

Abstract

Malaysian corporate sector is characterized by an insider system of corporate governance and induced the alignment problems between majority shareholders and the minority group. This paper investigates if there is an evidence of moral hazard behaviour being practiced in the executive remuneration decision. A match pair methodology is employed to isolate the effect of ESOS adoption from the usual motivations when deciding executive remunerations. Results suggest that while the amount of remuneration is directly linked to size of firms suggesting efficient and rational decision rather than on performance (profitability). The moral hazard behaviour is more evident when firms reward their executives even more in times of lower profitability or more losses over a longer period. The practice is more apparent among family owned firms not adopting ESOS. Though there is evidence of weak monitoring by government, it is not enough to ward off the insider pressures for personal gains.

Suggested Citation

  • Zahiruddin Ghazali & Fauziah Md. Taib, 2015. "It Pays to Be an Executive in Malaysia," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(5), pages 225-237, Special I.
    • Handle: RePEc:jda:journl:vol.49:year:2015:issue5:pp:225-237
    as

    Download full text from publisher

    File URL: http://muse.jhu.edu/journals/journal_of_developing_areas/v049/49.5.ghazali.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stettes, Oliver, 2016. "Arbeitswelt der Zukunft: Wie die Digitalisierung den Arbeitsmarkt verändert," IW-Analysen, Institut der deutschen Wirtschaft (IW) / German Economic Institute, volume 108, number 108.

    More about this item

    Keywords

    Corporate Governance; Executive Remuneration; Employee Shares Option Scheme and Interest Alignment;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jda:journl:vol.49:year:2015:issue5:pp:225-237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Abu N.M. Wahid (email available below). General contact details of provider: https://edirc.repec.org/data/cbtnsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.