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    Family directors, independent directors, remuneration committee and executive remuneration in Malaysian listed family firms

    Access Status
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    Authors
    Jong, Ling
    Ho, P.
    Date
    2019
    Type
    Journal Article
    
    Metadata
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    Citation
    Jong, L. and Ho, P.L. 2019. Family directors, independent directors, remuneration committee and executive remuneration in Malaysian listed family firms. Asian Review of Accounting. 28 (1): pp. 24-47.
    Source Title
    Asian Review of Accounting
    DOI
    10.1108/ARA-04-2019-0099
    ISSN
    1321-7348
    Faculty
    Curtin International
    School
    Curtin International
    URI
    http://hdl.handle.net/20.500.11937/77316
    Collection
    • Curtin Research Publications
    Abstract

    © 2019, Emerald Publishing Limited. Purpose: The purpose of this paper is to examine the influence of family directors and independent directors on executive remuneration of listed family firms in Malaysia, and their involvement in remuneration committee on executive remuneration. Design/methodology/approach: Fixed effect estimation is employed to examine 1,395 firm-year observations from 2010 to 2014. Findings: Family and independent directors do not have statistically significant influence on executive remuneration. Rather, family ownership exerts a significant positive influence on executive remuneration. This study also reveals that the interaction of family CEOs with the family directors on remuneration committee exerts a significant positive influence on executive remuneration. Research limitations/implications: The measurement of executive remuneration excludes the share options due to the non-disclosure of this information in the annual reports. Practical implications: The findings would be useful to the policy-makers and regulators in appraising the governance measures of remuneration arrangement. Originality/value: This study premises on the Type II agency conflict between controlling shareholders and minority shareholders. Independent directors could not mitigate the Type II agency conflict via the governance of executive remuneration. They are not the effective governance mechanism that the minority shareholders can rely on. The additional analyses provide theoretical implication that the pervasive Type II agency conflict is ameliorated when the CEOs do not have family relationships with the controlling family shareholders.

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