Staff View: Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.

Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.

Directors’ remuneration research has traditionally focused on total salary, cash compensation and long–term incentives plans. Consequently, a systematic study on short–term annual bonus is lacking. To address this omission, this study is conducted to investigate the trend of bonus received by the ex...

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Main Authors:	Khalid, Akhma Adlin, Zainal Abidin, Zubaidah, Kamarudin, Norashikin
Format:	Article
Language:	English
Published:	Universiti Teknologi MARA Cawangan Selangor 2012
Subjects:	Labor. Work. Working class Wages
Online Access:	http://ir.uitm.edu.my/id/eprint/30653/1/AJ_AKHMA%20ADLIN%20KHALID%20MAR%20B%2012.pdf http://ir.uitm.edu.my/id/eprint/30653/ http://arionline.uitm.edu.my/ojs/index.php/MAR/issue/view/30
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id	my.uitm.ir.30653
record_format	eprints
spelling	my.uitm.ir.306532020-06-03T03:52:59Z http://ir.uitm.edu.my/id/eprint/30653/ Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin. Khalid, Akhma Adlin Zainal Abidin, Zubaidah Kamarudin, Norashikin Labor. Work. Working class Wages Directors’ remuneration research has traditionally focused on total salary, cash compensation and long–term incentives plans. Consequently, a systematic study on short–term annual bonus is lacking. To address this omission, this study is conducted to investigate the trend of bonus received by the executive directors among Malaysian companies publicly listed on Bursa Malaysia in the current economic condition from 2008 to 2010. The study also examines the relationship between the executive directors’ bonus and shareholders’ value, specifically defined by firm performance, as measured using stock return (SR) and earning per share (EPS) and by firm size, as measured using the total number of employee, so as to test the practice of the principle corporate governance among the Malaysian listed companies from two different theories, i.e. agency theory and power theory. For firm performance, the findings support the agency theory since directors’ bonus is found to be positively associated with firm performance, as measured by EPS. However, the findings found no significant relationship between directors’ bonus and stock return. For firm size, the findings support both theories since directors’ bonus is found to be positively associated with firm performance as measured by total sales and negatively associated with firm size as measured by total number of employee. Consistent with the previous studies on executive bonuses, this association remains weak. However, power theory revealed that weak governance may foster the rise of powerful directors and thus, weaken the corporate governance value in a company. Therefore, it is suggested that close monitoring of directors’ remuneration should continue and shareholders should remain extra vigilant. Universiti Teknologi MARA Cawangan Selangor 2012-06 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/30653/1/AJ_AKHMA%20ADLIN%20KHALID%20MAR%20B%2012.pdf Khalid, Akhma Adlin and Zainal Abidin, Zubaidah and Kamarudin, Norashikin (2012) Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin. Management & Accounting Review, 11 (1). pp. 1-25. ISSN 1675-4077 http://arionline.uitm.edu.my/ojs/index.php/MAR/issue/view/30
institution	Universiti Teknologi Mara
building	Tun Abdul Razak Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Teknologi Mara
content_source	UiTM Institutional Repository
url_provider	http://ir.uitm.edu.my/
language	English
topic	Labor. Work. Working class Wages
spellingShingle	Labor. Work. Working class Wages Khalid, Akhma Adlin Zainal Abidin, Zubaidah Kamarudin, Norashikin Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
description	Directors’ remuneration research has traditionally focused on total salary, cash compensation and long–term incentives plans. Consequently, a systematic study on short–term annual bonus is lacking. To address this omission, this study is conducted to investigate the trend of bonus received by the executive directors among Malaysian companies publicly listed on Bursa Malaysia in the current economic condition from 2008 to 2010. The study also examines the relationship between the executive directors’ bonus and shareholders’ value, specifically defined by firm performance, as measured using stock return (SR) and earning per share (EPS) and by firm size, as measured using the total number of employee, so as to test the practice of the principle corporate governance among the Malaysian listed companies from two different theories, i.e. agency theory and power theory. For firm performance, the findings support the agency theory since directors’ bonus is found to be positively associated with firm performance, as measured by EPS. However, the findings found no significant relationship between directors’ bonus and stock return. For firm size, the findings support both theories since directors’ bonus is found to be positively associated with firm performance as measured by total sales and negatively associated with firm size as measured by total number of employee. Consistent with the previous studies on executive bonuses, this association remains weak. However, power theory revealed that weak governance may foster the rise of powerful directors and thus, weaken the corporate governance value in a company. Therefore, it is suggested that close monitoring of directors’ remuneration should continue and shareholders should remain extra vigilant.
format	Article
author	Khalid, Akhma Adlin Zainal Abidin, Zubaidah Kamarudin, Norashikin
author_facet	Khalid, Akhma Adlin Zainal Abidin, Zubaidah Kamarudin, Norashikin
author_sort	Khalid, Akhma Adlin
title	Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
title_short	Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
title_full	Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
title_fullStr	Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
title_full_unstemmed	Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.
title_sort	relationship between directors’ bonus and shareholders’ value: a view of corporate governance / akhma adlin khalid, zubaidah zainal abidin and norashikin kamarudin.
publisher	Universiti Teknologi MARA Cawangan Selangor
publishDate	2012
url	http://ir.uitm.edu.my/id/eprint/30653/1/AJ_AKHMA%20ADLIN%20KHALID%20MAR%20B%2012.pdf http://ir.uitm.edu.my/id/eprint/30653/ http://arionline.uitm.edu.my/ojs/index.php/MAR/issue/view/30
_version_	1685650686768840704
score	13.211869

Relationship between directors’ bonus and shareholders’ value: a view of corporate governance / Akhma Adlin Khalid, Zubaidah Zainal Abidin and Norashikin Kamarudin.

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