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:: year 12, Issue 39 (5-2019) ::
JMBR 2019, 12(39): 74-49 Back to browse issues page
Board Compensation and Risk-Taking: The Moderating Role of CEO Duality (Evidence from Banking Industry)
Abbas Ali Daryaei 1, Yasin Fattahi1, Salar Seyfi Laleh1
1- Imam Khomeini International University
Abstract:   (84 Views)
 

The purpose of this paper is to explore relationship between board compensation and risk taking with regard to CEO duality in the banking industry. Using a panel data regression model, with regard to optimal contracting and managerial power theory, we examined the data to determine the relationship between board compensation and risk taking of twenty one banks, for the period 2012 to 2018. Result show that, there is a negative and significantly relationship between board compensation and risk taking. Since the cash-based compensation is associated with the bank's debt payment and, therefore, it can reduce the risk-taking behavior of the board as a result of losing their income. However, in the presence of CEO duality as moderate variable, the relationship between board compensation and risk in the banking industry have not been seen. The findings can contribute to the creation of a board compensation payment structure in which the cash-based compensation plays a critical role to prevent excessive risk. It is suggested that other corporate governance mechanisms such as audit committee, percentage of executive and non-executive directors, etc. be considered on the relationship between compensation and risk.

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Type of Study: Empirical Study | Subject: Financial Institutions and Services (G2)
Received: 2019/04/28 | Accepted: 2019/10/21 | Published: 2019/10/22
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year 12, Issue 39 (5-2019) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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