Essays on Corporate Governance and Stock Returns in Australia

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Primary Supervisor
Roca, Eduardo
Chung, Richard Yiu-Ming
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Bao, Ben-Hsien
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Date
2017
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Abstract

This thesis examines the impact of corporate governance-related factors, particularly CEO incentive compensation, discretionary accruals and firm technical efficiency improvement, on stock returns in Australia. The motivation to investigate these impacts was the increasing importance of the equity-based compensation component in CEO remuneration packages, the numerous financial reporting scandals at high profile companies such as Enron, WorldCom and HIH Insurance, and an urgent call from the government on improvement in productivity. Among various corporate governance mechanisms, CEO compensation is viewed as an efficient incentive to align the interests of managers with those of shareholders. According to agency theory, effective compensation policies, particularly incentive-based pay, induce managers to make more effort, and to undertake risky and shareholder-wealth-increasing investments to increase their firms' value. However, in practice, some argue that too close a link between CEO compensation and firm performance may cause CEOs to become either too conservative or too aggressive, which may lead to suboptimal investments and lower firm value.

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Thesis Type
Thesis (PhD Doctorate)
Degree Program
Doctor of Philosophy (PhD)
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Griffith Business School
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The author owns the copyright in this thesis, unless stated otherwise.
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Subject
Corporate governance
Stock market returns
Stock exchanges
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