SHARE OWNERSHIP, EXECUTIVE COMPENSATION AND VALUE OF FIRM: A COMPARISON BETWEEN LOW AND HIGH LEVERED BANKS IN NIGERIA
Journal Title: Gusau Journal of Accounting and Finance - Year 2021, Vol 2, Issue 1
Abstract
It is still a paradox on whether individuals would be inspired when they deem it that resilient effort does improve the bank value and enhanced bank value would result into good pay. Conflicting finding have been reported in this area and as such, the study investigates impact of executive pay and share owned by executive as it affects the value of commercial banks listed in Nigeria. Proxies of compensation to executive employed are CEO pay, compensation to chairman and the highest pay to director. However, ratio of interest by executive in shares owned represents the ownership of share to banks’ executives. Value of the bank was measured using Tobin’s Q. Technique employed for estimation is the Robust OLS regression. Meanwhile, the tool of data analysis used was Stata version 13. Data from secondary source was used and were extracted from the published annual accounts statement of the banks covering the period from 2007 to 2018. Post estimation examination which includes normality test of standard error term, heteroscedasticity, multicollinearity was estimated to validate the regression results. The results revealed that, pay to CEO had positive and significant effect on value of high and low levered banks. However, compensation to chairmen and highest paid director had negative effect on value high and low levered banks. Additionally, effective of executive compensation on value of banks does not improve significantly through increase in executive share ownership for both high and low levered banks. It is recommended amongst others that the CEO pay should be tied to their performance. Increase in share ownership shouldn’t be used as a yardstick to achieve improved value for banks through executive compensation. Management should also tie the degree of Chairmen compensation and that of highest paid directors to enhanced value of banks through their efforts.
Authors and Affiliations
Ahmed Abubakar Zik-Rullahi, Musa Adeiza Farouk
Keywords
Related Articles
- EP ID EP709179
- DOI -
- Views 80
- Downloads 0
GOVERNMENT BUDGET DEFICITS AND MACROECONOMICS VARIABLES: NIGERIA EXPERIENCE
Over the years the federal government of Nigeria's budget has been in deficit and this has been receiving attention as regards its effect on the economy and other macroeconomic variables in Nigeria. The study, therefore,...
SUSTAINABILITY REPORTING AND FINANCIAL PERFORMANCE OF NIGERIAN AND MOZAMBICAN OIL AND GAS COMPANIES
The thrust of this study is to determine the influence of sustainability reporting on the financial performance of firms from Nigeria and Mozambique and it is triggered by recent increase in sustainability reporting by...
INFLUENCE OF ENVIRONMENTAL ACTIVITIES AS CORPORATE SOCIAL RESPONSIBILITY DIMENSION ON FIRM FINANCIAL PERFORMANCE OF NIGERIAN LISTED FIRMS
Ever since the beginning of companies’ activity in Nigeria, the value of corporate social responsibility (CSR) has been an important topic in accounting research. Despite extensive studies on CSR activities in Nigeria, s...
EFFECT OF FIRM SIZE ON EXPECTED RETURNS OF LISTED COMPANIES IN NIGERIA CAPITAL MARKET
Over the years, Nigeria capital market has experienced persistent decrease in performance. Investment decision is one of the key corporate decisions that affect firm financial performance. This study investigated the eff...
ARE THERE FACTORS INFLUENCING AUDITORS’ INDEPENDENCE IN LISTED FIRMS? EMPIRICAL ANALYSIS FROM NIGERIA
Quest for a potent measure of audit independence in the light of the increasing collapse of firms after an external auditor report informed the rationale behind this research. The study investigated the factors driving a...