REFLECTIONS OF CORPORATE GOVERNANCE ON PAY-PERFORMANCE SENSITIVITY: A NEW PERSPECTIVE<sup/>

IGLESIAS, THAYLA M. G.; SILVA, TAÍS D.; JESUKA, DUTERVAL; PEIXOTO, FERNANDA M.

doi:10.1590/1678-6971/eRAMF220088

THAYLA M. G. IGLESIAS

Federal University of Uberlândia (UFU), Uberlândia, MG, Brazil.

https://orcid.org/0000-0002-9762-7031

TAÍS D. SILVA

Federal University of Uberlândia (UFU), Uberlândia, MG, Brazil.

https://orcid.org/0000-0002-5972-8851

DUTERVAL JESUKA

Federal University of Uberlândia (UFU), Uberlândia, MG, Brazil.

https://orcid.org/0000-0002-1245-0979

FERNANDA M. PEIXOTO

Federal University of Uberlândia (UFU), Uberlândia, MG, Brazil.

https://orcid.org/0000-0002-0969-7567

1
The authors thank the Research Support Foundation of the State of Minas Gerais (Fundação de Amparo à Pesquisa do Estado de Minas Gerais – Fapemig), the Coordination for the Improvement of Higher Education Personnel (Capes) and the Organization of American States (OAS) for funding this research.

Thayla M. G. Iglesias, master from the Postgraduate Program in Aeronautical and Mechanical Engineering, Technological Institute of Aeronautics (ITA); Taís D. Silva, master from the Graduate Program in Accounting, Federal University of Uberlândia (UFU); Duterval Jesuka, master from the Graduate Program in Administration, UFU; Fernanda M. Peixoto, Ph.D. from the Faculty of Economic Sciences, Federal University of de Minas Gerais (UFMG).

Thayla M. G. Iglesias is now a doctoral student at the Graduate Program in Administration of UFU; Taís D. Silva is now a doctoral student at the Graduate Program in Accounting of UFU; Duterval Jesuka is now a doctoral student at the Graduate Program in Administration of UFU; Fernanda M. Peixoto is now a professor at the Faculty of Management and Business of UFU.

Correspondence concerning this article should be addressed to Fernanda M. Peixoto, Avenida João Naves de Ávila, 2121, Santa Mônica, Uberlândia, Minas Gerais, Brasil, CEP 38408-392. E-mail: fmacielpeixoto@gmail.com

Variable	Symbol	Metrics	Expected signal	Theoretical background	Database
Total executive compensation	∆REMT	Total executive compensation of the current year - total compensation of the previous year / market value in t-1.	(+)	Jensen and Murphy (1990)Jensen, M. C., & Murphy, K. J. (1990). Performance pay and top-management incentives. Journal of Political Economy, 98(2), 225–264., Victor (2013)Victor. F. (2013) Estrutura de propriedade e remuneração executiva: Efeitos diretos e indiretos da regulamentação (Tese de doutorado, Universidade Federal do Rio Grande do Sul, Porto Alegre, RS, Brasil)., and Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	2
CEO duality	DCEO	A dummy variable that assumes 1 if the CEO is also the chairman and 0 if not.	(+)	Amzaleg et al. (2014)Amzaleg, Y., Azar, O. H., Ben-Zion, U., & Rosenfeld, A. (2014). CEO control, corporate performance and pay-performance sensitivity. Journal of Economic B0ehavior & Organization, 106, 166–174. doi:10.1016/j.jebo.2014.07.004 https://doi.org/10.1016/j.jebo.2014.07.0... and Jaiswall and Bhattacharyya (2016)Jaiswall, S. S. K., & Bhattacharyya, A. K. (2016). Corporate governance and CEO compensation in Indian firms. Journal of Contemporary Accounting & Economics, 12(2), 159–175. doi:10.1016/j.jcae.2016.06.001 https://doi.org/10.1016/j.jcae.2016.06.0...	2
Board independence	IND	Proportion of independent board members in the board of directors.	(+)	Hermalin and Weisbach (2003)Hermalin, B. E., & Weisbach, M. S. (2003). Boards of directors as an endogenously determined institution: A survey of the economic literature. FRB New York – Economic Policy Review, 9(1), 1–39.	2
Ownership concentration	CAC	Percentage of ordinary shares held by the three largest shareholders.	(-)	Chen et al. (2015)Chen, S., Lin, B., Lu, R., & Zhang, T. (2015). Controlling shareholders’ incentives and executive pay-for-performance sensitivity: Evidence from the split share structure reform in China. Journal of International Financial Markets, Institutions and Money, 34, 147–160. doi:10.1016/j.intfin.2014.10.003 https://doi.org/10.1016/j.intfin.2014.10... and Brandão et al. (2019)	2
Shareholders' agreement	AC	A dummy variable that assumes 1 for the presence of a shareholders' agreement and 0 for its absence.	(+)	SSilva et al. (2018)Silva, A. L. P. D., Lana, J., & Marcon, R. (2018). Agreeing and impacting: The effect of the shareholders’ agreement on firms’ market value. Brazilian Business Review, 15(1), 88–104. doi:10.15728/bbr.2018.15.1.6 https://doi.org/10.15728/bbr.2018.15.1.6...	2
Remuneration committee	CREM	A dummy variable assumes 1 for the presence of a remuneration committee and 0 for its absence.	(+)	Brandão et al. (2019Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066... ) and Kanapathippillai et al. (2019)Kanapathippillai, S., Mihret, D., & Johl, S. (2019). Remuneration committees and attribution disclosures on remuneration decisions: Australian evidence. Journal of Business Ethics, 158(4), 1063–1082. doi:10.1007/s10551-017-3736-7 https://doi.org/10.1007/s10551-017-3736-...	2
Variation in the market value	∆VM	(Market value of the current year - market value of the previous year)/ market value of the previous year.	(+)	Jensen and Murphy (1990)Jensen, M. C., & Murphy, K. J. (1990). Performance pay and top-management incentives. Journal of Political Economy, 98(2), 225–264. and Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	1
Return on equity	ROE	Net profit of the company in the current year / company's equity in t-1.	(+)	Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	1
Company size	TAM	Ln (total assets) in t-1.	(+)	Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	1
Company sector	SETOR	A dummy variable for each sector of activity classified by Economática.	(+)	Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	1
Period of analysis	ANO	A dummy variable for each year of analysis.		Brandão et al. (2019)Brandão, I. D. F., Vasconcelos, A. C. D., Luca, M. M. M. D., & Crisóstomo, V. L. (2019). Composition of the board of directors and pay-performance sensitivity. Revista Contabilidade & Finanças, 30(79), 28–41. doi:10.1590/1808-057x201806610 https://doi.org/10.1590/1808-057x2018066...	1

Variable	Obs.	Average	Standard deviation	Min.	Max.
∆REMT	514	-0.04	1.28	-3.96	2.27
REMT	530	35,589,534.44	68,067,839.41	0.00	670,825,000.00
DCEO	450	0.03	0.17	0.00	1.00
CAC	451	0.51	0.19	0.12	1.00
AC	491	0.53	0.50	0.00	1.00
CREM	491	0.30	0.46	0.00	1.00
IND	451	0.35	0.23	0.00	1.00
TAM	543	16.81	1.42	14.56	20.45
∆VM	520	0.44	1.44	-0.83	5.29
VM	527	29,837,857.93	56,487,353.17	252,914.86	371.608.254.46
ROE	532	0.17	0.26	-0.17	0.99

	Model 1	Model 2	Model 3	Model 4
CREM	-0.0577
CREM	(0,1151)
∆VM	-0.0765	-0.1476	0.2813	-0.1656
∆VM	(0.0801)	(0.1425)	(0.1895)	(0.1188)
∆VM*CREM	0.1943
∆VM*CREM	(0.159)
ROE	-0.3455	0.0837	0.1072	-0.5273
ROE	(0.3061)	(0.2704)	(0.2587)	(0.3867)
TAM	-0.0902^ p < 0.05, and	-0.0573^* * p < 0.10,	-0.0389	-0.4140^* ***** p < 0,01. Os modelos foram estimados com dummies para setor e ano, e as variáveis ROE (retorno sobre o patrimônio líquido) e TAM (tamanho da empresa) foram utilizadas como controle em todos os quatro modelos deste estudo. Quanto à variável dependente, adotou-se, em todos os modelos, a variável ∆REMT (remuneração total do executivo). As variáveis independentes CREM (comitê de remuneração), ∆VM (variação do valor de mercado), DCEO (dualidade de CEO), IND (independência do conselho), CAC (concentração acionária) e AC (acordo de acionistas) se diferem dos modelos, sendo: modelo 1 (CREM; ∆VM; ∆VMCREM); modelo 2 (DCEO; ∆VM; ∆VMDCEO; IND; ∆VMIND); modelo 3 (CAC; ∆VM; ∆VMCAC); modelo 4 (AC; ∆VM; ∆VM*AC). Destaca-se, também, que, em cada um dos modelos, há a interação da variável ∆VM (variação do valor de mercado) com as demais variáveis independentes da equação.
TAM	(0.0447)	(0.0319)	(0.0297)	(0.01464)
DCEO		-0.1472
DCEO		(0.2975)
∆VM*DCEO		0.5015**
∆VM*DCEO		(0.2343)
IND		-0.4006^ p < 0.05, and
IND		(0.19)
∆VM*IND		0.2903
∆VM*IND		(0.3193)
CAC			0.0004
CAC			(0.002)
∆VM*CAC			-0.0060^* * p < 0.10,
∆VM*CAC			(0.0036)
AC				0.0638
AC				(0.3269)
∆VM*AC				0.1667
∆VM*AC				(0.1469)
_cons	0.9314	0.15	1.1822^ p < 0.05, and	6.2260^ p < 0.05, and
_cons	(0.7988)	(0.645)	(0.4857)	(2.5797)
SETOR	Yes	Yes	Yes	Yes
ANO	Yes	Yes	Yes	Yes
N	462	420	422	462
VIF	1.42	2.68	3.98	1.79
Hausman	0.0666	0.9548	0.6937	0.0113
Wooldridge	0.3566	0.9593	0.4802	0.3507
Wald	0.0000	0.0000	0.0000	0.0000

\begin{matrix} Δ {REMT}_{it} = β_{0} + β_{1} {DCEO}_{it} + β_{2} Δ {VM}_{it} + β_{3} Δ {VM}_{it} \times {DCEO}_{it} + β_{4} {IND}_{it} + \\ β_{5} Δ {VM}_{it} \times {IND}_{it} + β_{6} {ROE}_{it} + β_{7} {TAM}_{it} + β_{8} S {ETOR}_{it} + β_{9} {ANO}_{it} + u_{it} \end{matrix}

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The authors thank the Research Support Foundation of the State of Minas Gerais (Fundação de Amparo à Pesquisa do Estado de Minas Gerais – Fapemig), the Coordination for the Improvement of Higher Education Personnel (Capes) and the Organization of American States (OAS) for funding this research.

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