Disclosure Factors of Executive Managers Remuneration: A Probit Model

Abstract

Problem statement: The study contributes to the literature that argues that the convergence trend of corporate governance systems is either nominal or hasn’t the impact that the advocates of this theory hypothesize. Approach: The objective of the study was to test this hypothesis the key issue of remuneration had been chosen to illustrate that the differences of corporate governance systems still exist and they have a substantial impact on business environment. Disclosure or not of information regarding these issues preoccupies regulating, legislative authorities as well as capital market participants. The study, using a probit regression analysis, examined whether these differences are observable in Greece. Greece is a country with the typical characteristics of a Continental Europe corporate governance system. The results were compared with the reported characteristics of Anglo-Saxon countries. The study analyzed data over a period of 6 years (2001-2006). The 60 firms largest, in terms of capitalization and free float, were used. Results: The major factors that affect the remuneration disclosure were the adoption of mergers and acquisitions as the method to expand firm’s size, the investments risks that the firm is willing to take, stock market capitalization, board of directors size, capital to sales ratio, number of independent board of directors member dismissals and the quality of corporate governance. These differences were significantly different than the ones reported for Anglo-Saxon countries. Conclusion: The study had proven that remuneration disclosure levels in Greece are defined by a different set of factors than the ones in a typical Anglo-Saxon country. Policy and regulation makers should take into account these differences and not adopt isomorphic approaches to different problems and situations.