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Average Pay in Banks: Do Agency Problems and Bank Performance Matter?

Author

Listed:
  • Harkin, Sean M.
  • Mare, Davide S.
  • Crook, Jonathan N.

Abstract

We study the determinants of average pay across all levels of staff seniority for UK banks between 2003 and 2012. We show that pay is affected by agency problems but not by bank operating performance. Average pay does not depend on accounting outcomes at the bank level. By contrast, average pay is positively affected by the presence of a Remuneration Committee and the proportion of Non-Executives on the Board. These findings indicate that bank pay is determined by agency issues, not bank accounting performance. Our results have practical implications for bank shareholders and regulators, suggesting the need for greater transparency in governance of bank pay.

Suggested Citation

  • Harkin, Sean M. & Mare, Davide S. & Crook, Jonathan N., 2017. "Average Pay in Banks: Do Agency Problems and Bank Performance Matter?," MPRA Paper 81249, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:81249
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    File URL: https://mpra.ub.uni-muenchen.de/81249/1/MPRA_paper_81249.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Corporate Governance; Remuneration; Bank Performance; Agency Problems.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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