The Effect of the Mandatory Adoption of Corporate Governance Mechanisms on Executive Compensation |
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Authors: | Constantinos G Chalevas |
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Institution: | Department of Accounting and Finance, Athens University of Economics and Business, Athens, Greece |
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Abstract: | This study investigates empirically the effect of corporate governance principles on executive compensation and firm performance prior to and after the adoption of the first Greek Law on corporate governance. Prior to the adoption of the law, managers were not compensated in line with their performance. Since its introduction, a significant link has been observed between executive compensation and company performance as measured by accounting measures of performance. Following the adoption of corporate governance principles by law, the main mechanism that controls executive compensation is the election of independent non-executive board members. The results are robust to alternative accounting measures of performance. |
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Keywords: | Corporate governance Executive compensation Company performance |
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