Remuneration committee effectiveness and narrative remuneration disclosure

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Kanapathippillai, Sutharson
Johl, Shireenjit K
Wines, Graeme
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2016
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Abstract

This paper investigates the impact of the effectiveness of remuneration committees on narrative voluntary disclosure of information on remuneration. We develop a composite measure as a proxy for remuneration committee effectiveness by incorporating remuneration committee size, remuneration committee independence, remuneration committee chairman's independence, expertise and diligence. We find that both the existence and quality of a remuneration committee play a significant role in the decision to provide voluntary disclosure of remuneration actions and in the extent of this disclosure. Further analysis suggests that remuneration committee independence and diligence enhance the quality of remuneration committees. The results have policy implications for remuneration committees as an effective corporate governance mechanism.

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Pacific-Basin Finance Journal

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40

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Accounting, auditing and accountability

Banking, finance and investment

Social Sciences

Business, Finance

Business & Economics

Corporate governance

Global financial crisis

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Kanapathippillai, S; Johl, SK; Wines, G, Remuneration committee effectiveness and narrative remuneration disclosure, Pacific-Basin Finance Journal, 2016, 40, pp. 384-402

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