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Executive compensation in government-linked companies: evidence from Malaysia

Minhat, Marizah; Abdullah, Mazni

Authors

Marizah Minhat

Mazni Abdullah



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.

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