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Board Compensation and Risk-Taking: The Moderating Role of CEO Duality (Evidence from Banking Industry) (in Persian)

Author

Listed:
  • Daryaei, Abbas Ali

    (Imam Khomeini International University)

  • Fattahi, Yasin

    (Imam Khomeini International University)

  • Seyfi Laleh, Salar

    (Imam Khomeini International University)

Abstract

The purpose of this paper is to explore relationship between board compensation and risk taking with regard to CEO duality in the banking industry. Using a panel data regression model, with regard to optimal contracting and managerial power theory, we examined the data to determine the relationship between board compensation and risk taking of twenty one banks, for the period 2012 to 2018. Result show that, there is a negative and significantly relationship between board compensation and risk taking. Since the cash-based compensation is associated with the bankchr('39')s debt payment and, therefore, it can reduce the risk-taking behavior of the board as a result of losing their income. However, in the presence of CEO duality as moderate variable, the relationship between board compensation and risk in the banking industry have not been seen. The findings can contribute to the creation of a board compensation payment structure in which the cash-based compensation plays a critical role to prevent excessive risk. It is suggested that other corporate governance mechanisms such as audit committee, percentage of executive and non-executive directors, etc. be considered on the relationship between compensation and risk.

Suggested Citation

  • Daryaei, Abbas Ali & Fattahi, Yasin & Seyfi Laleh, Salar, 2019. "Board Compensation and Risk-Taking: The Moderating Role of CEO Duality (Evidence from Banking Industry) (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(39), pages 74-49, May.
    • Handle: RePEc:mbr:jmbres:v:12:y:2019:i:39:p:74-49
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    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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