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Corporate Governance Reforms And Executive Compensation Determination: Evidence From The Uk

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  • SOURAFEL GIRMA
  • STEVE THOMPSON
  • PETER W. WRIGHT

Abstract

This paper examines the effect that the ‘Cadbury reforms’ have had on the pay determination process of executives in the UK. Our results suggest that, on average, the impact has been disappointing. The relationship between pay and performance remains weak and the link to firm size has, if anything, been strengthened. However, our results suggest considerable heterogeneity in the impact of the reforms, and for those firms above median employment the link between pay and profits appears to have been reinforced.

Suggested Citation

  • Sourafel Girma & Steve Thompson & Peter W. Wright, 2007. "Corporate Governance Reforms And Executive Compensation Determination: Evidence From The Uk," Manchester School, University of Manchester, vol. 75(1), pages 65-81, January.
    • Handle: RePEc:bla:manchs:v:75:y:2007:i:1:p:65-81
    DOI: 10.1111/j.1467-9957.2007.01003.x
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    1. Charkham, Jonathan & Simpson, Anne, 1999. "Fair Shares: The Future of Shareholder Power and Responsibility," OUP Catalogue, Oxford University Press, number 9780198292142.
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    Cited by:

    1. Bachan, Ray & Bryson, Alex, 2022. "The Gender Wage Gap Among University Vice Chancellors in the UK," Labour Economics, Elsevier, vol. 78(C).
    2. Ian Gregory-Smith & Brian G. M. Main, 2016. "Testing the Participation Constraint in the Executive Labour Market," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(4), pages 399-426, September.
    3. Bayer, Christian & Burhop, Carsten, 2009. "Corporate governance and incentive contracts: Historical evidence from a legal reform," Explorations in Economic History, Elsevier, vol. 46(4), pages 464-481, October.
    4. Sheeba Kapil & Rakesh K Mishra, 2019. "Corporate Governance structure and firm performance in Indian context: A Structural Equation Modelling Approach," Working Papers 1937, Indian Institute of Foreign Trade.
    5. Paul Gregg & Sarah Jewell & Ian Tonks, 2010. "Executive Pay and Performance in the UK," FMG Discussion Papers dp657, Financial Markets Group.
    6. Neslihan Ozkan, 2011. "CEO Compensation and Firm Performance: an Empirical Investigation of UK Panel Data," European Financial Management, European Financial Management Association, vol. 17(2), pages 260-285, March.
    7. Wang, Xiaoming & Xu, Tingting, 2022. "Pay of political directors in China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    8. Hani El-Chaarani, 2017. "The Mutual Impacts of Corporate Governance Dimensions and Legal Protection Systems on the Performance of European Banks: A Post-Crisis Study," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 538-567.
    9. Danquah Jeff Boakye & Gabriel Sam Ahinful & Randolph Nsor-Ambala, 2020. "Chief Executive Officer Compensation and Financial Performance: Evidence from the Alternative Investment Market in the UK," Indian Journal of Corporate Governance, , vol. 13(1), pages 63-84, June.
    10. Paul Gregg & Sarah Jewell & Ian Tonks, 2005. "Executive Pay and Performance in the UK 1994-2002," The Centre for Market and Public Organisation 05/122, The Centre for Market and Public Organisation, University of Bristol, UK.
    11. Cao, Jerry & Pan, Xiaofei & Tian, Gary, 2011. "Disproportional ownership structure and pay-performance relationship: Evidence from China's listed firms," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 541-554, June.

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