Executive compensation in less regulated markets: the impact of debt monitoring |
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Authors: | Andrew Marshall Helena Pinto Leilei Tang |
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Institution: | 1. Department of Accounting and Finance, University of Strathclyde, Glasgow, UKa.marshall@strath.ac.uk;3. The York Management School, University of York, York, UK https://orcid.org/0000-0002-7931-8219;4. Department of Accounting and Finance, University of Strathclyde, Glasgow, UK |
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Abstract: | This paper shows that in the lightly regulated Alternative Investment Market (AIM) voluntary corporate board structures might not reduce agency costs between shareholder and executive directors. In this less regulated market, we find that the extent of debt affects executive pay. In addition, the theoretical determinants of executive pay affect CEO and other executives’ pay and incentives differently in this market. We find no evidence that debt levels affect CEO pay in a matched sample of Main Market firms. Our results suggest that debtholders could be better monitors of executive directors’ actions, in comparison to voluntary governance committees in less regulated markets. |
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Keywords: | Debt monitoring corporate governance board structures executive compensation executive incentives less regulated markets |
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