Executive Compensation and Performance of Companies in the Brazilian Capital Market: Evidence of Negative Relationship with Focus on the Interests of the Controlling Shareholder

Authors

  • Isaac Gezer Silva de Oliveira Instituto Federal do Espírito Santo – IFES
  • Annor da Silva Junior Universidade Federal do Espírito Santo – UFES

DOI:

https://doi.org/10.4013/base.2021.181.02

Keywords:

Executive compensation, Corporate performance, Corporate governance, Brazilian capital market, Agency Theory

Abstract

This study aims to analyze the relationship between executive compensation and performance in public companies listed on the Brazilian capital market – [B]3 Brasil Bolsa Balcão. Theoretically, the study is based on the agency theory focusing on the principal-principal perspective of agency conflict. The sample comprised the 100 companies with the highest liquidity in the trading of shares listed on the [B]3 during the 2010-2015 period, totaling 488 observations. Six hypotheses were developed, and several variables were measured to test the relationship between executive compensation and performance. For the selected sample, the results of the estimated econometric models indicate that executive compensation has a negative relationship with variables performance, presence of family on the board of directors, voting rights shares, and the duality of two share classes, voting and non-voting. The results also indicate a negative relationship between ownership concentration and performance and a nonsignificant relationship between executive compensation and family control. The synthesis of the results indicates that the corporate governance model adopted by Brazilian public companies prioritizes the interests of the controlling shareholder instead of executive compensation.

Author Biographies

Isaac Gezer Silva de Oliveira, Instituto Federal do Espírito Santo – IFES

Mestre em ciências contábeis pela Ufes. Professor do Ifes

Annor da Silva Junior, Universidade Federal do Espírito Santo – UFES

Doutor em administração pela UFMG. Professor da Ufes

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Published

2021-04-20

Issue

Vol. 18 No. 1 (2021): JAN/MAR

Section

Articles

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