Voluntary Corporate Governance Disclosure, Board Diversity, and CEO Compensation: Evidence from Post-Apartheid South Africa

Abstract

Rampant corporate collapses over the past few decades have put corporate governance issues in the spotlight. Shareholders have become increasingly participative over time; corporate boards are no longer passive, whilst regulators constantly seek to implement more effective corporate governance mechanisms. In the midst of these developments, post-apartheid South Africa has notoriously pursued an integrated corporate governance framework in the form of the King Reports. Within the South African corporate governance system, firms are required to disclose their compliance with recommended good corporate governance practices to shareholders and other stakeholders. Further, due to a long history of apartheid, board diversity has become a current and contentious corporate governance issue confronting South African firms. Using a hand-collected data set for 185 unique South African listed firms from 2008-2013, this thesis measures the level of compliance with 72 corporate governance (CG) provisions in the third CG code in South Africa. The thesis also examines the determinants of compliance and explores the interrelations between corporate governance quality, board diversity, and CEO compensation.