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The link between executive remuneration incentives and regulatory noncompliance

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  • Siemen Jan Ruben Bouwmeester

    (Radboud Universiteit, Nijmegen, Netherlands)

  • Eva Kristina Matthaei

    (Radboud Universiteit, Nijmegen, Netherlands)

Abstract

This study examines how executive remuneration structures relate to corporate misconduct in the form of regulatory noncompliance. Using a panel of US firms over the past 25 years, we link subsidiary-level violations of all major areas of corporate regulation (e.g., antitrust or employment law) to parent-company executive remuneration. We find that equity-based compensation is positively associated with regulatory noncompliance, whereas higher fixed remuneration relative to firm size significantly reduces it. These findings provide novel evidence on the unintended consequences of equity-based incentives and are relevant for boards, remuneration committees, and regulators concerned with executive pay design and compliance risks.

Suggested Citation

  • Siemen Jan Ruben Bouwmeester & Eva Kristina Matthaei, 2026. "The link between executive remuneration incentives and regulatory noncompliance," Maandblad Voor Accountancy en Bedrijfseconomie Articles, Maandblad Voor Accountancy en Bedrijfseconomie, vol. 100(2), pages 59-68, March.
    • Handle: RePEc:arh:jmabec:v:100:y:2026:i:2:p:59-68
    DOI: 10.5117/mab.100.180283
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