Abstract

SALEHI, Mahdi; JAMALIKAZEMINI, Bahman  and  FARHANGDOUST, Shayan. Board compensation and disclosure quality: Corporate governance interference. Contad. Adm [online]. 2018, vol.63, n.4. ISSN 0186-1042.  https://doi.org/10.22201/fca.24488410e.2018.1653.

This paper investigates the impact of financial information disclosure quality on board compensation in various corporate governance mechanisms in Iran. A unique data set from a sample of 176 Iranian listed firms over the period 2010-2016 is used in order to address the following questions: as an incentive mechanism for managers, is there any relationship between compensation and disclosure quality of financial information while some corporate governance factors are interfered? Duality on board, educated members, females, and independent members are the aspects that are considered as corporate governance interference. Along with these issues, we investigate whether firm complexity is likely to affect the mentioned relationship. We find that corporate governance mechanisms including educated board members, independent members, females, and board members duality are not some reward-enhancing methods. This lends support to the conjecture that directors neglect the quality of information they provide, and as a consequence, they adjust their bonuses via other methods. Our findings indicate that there is a significant and positive relationship between board compensation and disclosure quality in firms which have complex activities and foreign sales. Finally, we indicate that disclosure quality has no significant impact on compensation in firms which have complex activity of controlling some subsidiaries.

Keywords : Board Compensation; Disclosure quality; Corporate governance; Tehran stock exchange.