Executive compensation in government-linked companies: evidence from Malaysia

Minhat, Marizah; Abdullah, Mazni

Abstract

The aim of this study was to explore the characteristics of executive pay, equity ownership incentives and pay–performance relationship in government-controlled firms. Data were hand-collected from the annual reports of 179 companies listed on Bursa Malaysia. The results show that executive pay is lower in government-linked companies. Positive pay–performance relationship is also not evident for this category of firms, which indicates that their executives were largely guaranteed with certain level of pay irrespective of performance. The level of equity ownership incentives provides the executives in government-controlled firms with very little incentive to produce effort that can improve firm performance. Overall, our findings are consistent with the inefficient pay hypothesis developed in this study.

Citation

Minhat, M., & Abdullah, M. (2014). Executive compensation in government-linked companies: evidence from Malaysia. Applied Economics, 46(16), 1861-1872. https://doi.org/10.1080/00036846.2014.887192

• Journal Article Type: Article
• Online Publication Date: Feb 26, 2014
• Publication Date: Jun 3, 2014
• Deposit Date: Mar 23, 2016
• Journal: Applied Economics
• Print ISSN: 0003-6846
• Electronic ISSN: 1466-4283
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 46
• Issue: 16
• Pages: 1861-1872
• DOI: https://doi.org/10.1080/00036846.2014.887192
• Keywords: Executive compensation; government-linked companies; pay–performance; inefficient pay; state firms
• Public URL: http://researchrepository.napier.ac.uk/id/eprint/9726
• Publisher URL: http://dx.doi.org/10.1080/00036846.2014.887192