It pays to be an executive in Malaysia
Malaysian corporate sector is characterized by an insider system of corporate governance and induced the alignment problems between majority shareholders and the minority group.This paper investigates if there is an evidence of moral hazard behaviour being practiced in the executive remuneration dec...
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| Format: | Article |
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Tennessee State University College of Business
2015
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| _version_ | 1803626970633732096 |
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| author | Ghazali, Zahiruddin Md. Taib, Fauziah |
| author_facet | Ghazali, Zahiruddin Md. Taib, Fauziah |
| author_sort | Ghazali, Zahiruddin |
| collection | UUM |
| description | Malaysian corporate sector is characterized by an insider system of corporate governance and induced the alignment problems between majority shareholders and the minority group.This paper investigates if there is an evidence of moral hazard behaviour being practiced in the executive remuneration decision. A match pair methodology is employed to isolate the effect of ESOS adoption from the usual motivations when deciding executive remunerations. Results suggest that while the amount of remuneration is directly linked to size of firms suggesting efficient and rational decision rather than on performance (profitability).The moral hazard behaviour is more evident when firms reward their executives even more in times of lower profitability or more losses over a longer period.The practice is more apparent among family owned firms not adopting ESOS. Though there is evidence of weak monitoring by government, it is not enough to ward off the insider pressures for personal gains. |
| first_indexed | 2024-07-04T05:58:38Z |
| format | Article |
| id | uum-15408 |
| institution | Universiti Utara Malaysia |
| last_indexed | 2024-07-04T05:58:38Z |
| publishDate | 2015 |
| publisher | Tennessee State University College of Business |
| record_format | dspace |
| spelling | uum-154082016-04-13T04:56:52Z https://repo.uum.edu.my/id/eprint/15408/ It pays to be an executive in Malaysia Ghazali, Zahiruddin Md. Taib, Fauziah HD28 Management. Industrial Management Malaysian corporate sector is characterized by an insider system of corporate governance and induced the alignment problems between majority shareholders and the minority group.This paper investigates if there is an evidence of moral hazard behaviour being practiced in the executive remuneration decision. A match pair methodology is employed to isolate the effect of ESOS adoption from the usual motivations when deciding executive remunerations. Results suggest that while the amount of remuneration is directly linked to size of firms suggesting efficient and rational decision rather than on performance (profitability).The moral hazard behaviour is more evident when firms reward their executives even more in times of lower profitability or more losses over a longer period.The practice is more apparent among family owned firms not adopting ESOS. Though there is evidence of weak monitoring by government, it is not enough to ward off the insider pressures for personal gains. Tennessee State University College of Business 2015 Article PeerReviewed Ghazali, Zahiruddin and Md. Taib, Fauziah (2015) It pays to be an executive in Malaysia. The Journal of Developing Areas, 49 (5). pp. 225-237. ISSN 1548-2278 http://doi.org/10.1353/jda.2015.0047 doi:10.1353/jda.2015.0047 doi:10.1353/jda.2015.0047 |
| spellingShingle | HD28 Management. Industrial Management Ghazali, Zahiruddin Md. Taib, Fauziah It pays to be an executive in Malaysia |
| title | It pays to be an executive in Malaysia |
| title_full | It pays to be an executive in Malaysia |
| title_fullStr | It pays to be an executive in Malaysia |
| title_full_unstemmed | It pays to be an executive in Malaysia |
| title_short | It pays to be an executive in Malaysia |
| title_sort | it pays to be an executive in malaysia |
| topic | HD28 Management. Industrial Management |
| work_keys_str_mv | AT ghazalizahiruddin itpaystobeanexecutiveinmalaysia AT mdtaibfauziah itpaystobeanexecutiveinmalaysia |