An Empirical Analysis of Managerial Power and Executive Remuneration: Mediating Role of Firm Performance

Managerial power is the most critical element for the organizations because it plays a vital role in firm performance and pay setting process. Moreover, top management have all important information of the firms and if managerial power is high they may misuse such information. Considering the importance of managerial power numerous studies analyzed the different aspects of managerial power using data of different countries. This study proposed three hypotheses to assess the association among managerial power, executive remuneration, and firm performance. This study used PLS-SEM approach to test developed hypotheses using data of S&P/ASX 50 index firms. All of the proposed hypotheses are accepted. This study also meet the quality criteria of both reflective and formative measurement scale as prerequisite to the assessment of structural model. Keywords: Managerial Power, Executive Remuneration, Firm Performance, Reflective and Formative Measurement, Australi

Assessing the Effect of Managerial Power on Firm Performance through the Perceptual Lens of Executive Remuneration

Executives or top management in any organization play the central role in designing firms’ policies including their own remuneration, investments and capital related decisions. Due to their prime importance, executives have greater access to all important information related to organizations. If such personals have greater control over the board or organization, it alludes as managerial power. Concisely, if managerial power is high then the management may misuse such information for their personal benefits. Therefore, considering the importance of managerial power, the current study aims to investigate the effects of managerial power and executive remuneration on firm performance. In order to empirically test the proposed relationships, the current study applied PLS-SEM approach by using the data of Sugar & Allied industry of Pakistan Stock Exchange for the year 2014. The results of the current study indicated that direct effect of managerial power on firm performance did not exist, however, the empirical findings showed that managerial power had a significant effect on executive remuneration. Furthermore, managerial power also significantly influenced the firm performance through the executive remuneration or remuneration mediated the relationship between managerial power and firm performance. Therefore, the current study suggests that firm should take necessary actions to reduce the managerial power and design the pay of top management in a way that any harmful action of managers against the firm’s wealth would significantly affect their own benefits

Assessing the Effect of Managerial Power on Firm Performance through the Perceptual Lens of Executive Remuneration

Executives or top management in any organization play the central role in designing firms’ policies including their own remuneration, investments and capital related decisions. Due to their prime importance, executives have greater access to all important information related to organizations. If such personals have greater control over the board or organization, it alludes as managerial power. Concisely, if managerial power is high then the management may misuse such information for their personal benefits. Therefore, considering the importance of managerial power, the current study aims to investigate the effects of managerial power and executive remuneration on firm performance. In order to empirically test the proposed relationships, the current study applied PLS-SEM approach by using the data of Sugar & Allied industry of Pakistan Stock Exchange for the year 2014. The results of the current study indicated that direct effect of managerial power on firm performance did not exist, however, the empirical findings showed that managerial power had a significant effect on executive remuneration. Furthermore, managerial power also significantly influenced the firm performance through the executive remuneration or remuneration mediated the relationship between managerial power and firm performance. Therefore, the current study suggests that firm should take necessary actions to reduce the managerial power and design the pay of top management in a way that any harmful action of managers against the firm’s wealth would significantly affect their own benefits

Impact of Social and Human Capital on Entrepreneurship: A study in Pakistani Prospective

Whether entrepreneurial business high performance is already there in business or it can be created through the process of opportunity recognition in the society. Based on these points it seems that entrepreneur must have some kind of knowledge comes through education, past experience, social contact, special source of information. This study is based on primary source of data which was collected through survey of entrepreneurs from the areas of Mardan, Peshawar, and Rawalpindi. The questionnaire approach was used for data collection and 70 respondents were selected for sample size. Result of this study revealed that the opportunities for their business success, so human capital (knowledge, skill, experience, education) and social capital (social contacts, social networks, social club) has positively affected the business rate of success.   Key words: Social Capital, Human Capital, Opportunities, Entrepreneurship, Pakistan

A role corporate governance and firm's environmental performance: a moderating role of institutional regulations

Climate change has become one of the biggest issue across the globe as most countries have been bearing the consequences of this phenomenon on a global scale. Countries have been drafting environmental regulations to help mitigate the environmental pollution caused by climate change. Therefore, the implications of environmental policies in various sectors of the economy are dependent on state regulations. The main objective of this study is to investigate the impact of corporate governance on environmental performance. Furthermore, this study examines the impact of institutional regulations on the relationship of corporate governance and firms’ environmental performance. The data was collected from the top 120 manufacturing companies that are based in Pakistan, India, China and Bangladesh. The binary logit regression methodology was employed in this study. The results indicate that the attributes of corporate governance have a positive and significant impact on green performance. In addition, the results were also positive and significant on the moderating role of institutional regulation for corporate governance and firm performance. Hence, based on the empirical findings, this study recommends strict environmental institutional regulations to further enhance environmental performance

The mediating role of innovation between corporate governance and firm financial performance: evidence from Pakistan

Although laws concerning the corporate governance have been formulated and also promulgated in Pakistan, yet the Taj Company, Crescent Bank, Mehran Bank and various other firms have emerged a glaring violation of such laws in Pakistan. The previous literature has also highlighted several issues related to the corporate governance among the Pakistani firms, Therefore, the objective of the current study was to investigate the relationship between the corporate governance and performance of the Pakistani firms. In the current study, corporate governance includes board structure (independent directors, foreign directors, board size, gender diversity), board capital (director's education, prestigious education, role legitimacy, directors' interlocks) and ownership structure (concentrated ownership, family ownership, foreign ownership). Besides, this study aimed to investigate the mediating role of innovation between the corporate governance and firm performance to bridge the gap in the existing literature. The theoretical foundation of the current study was based on the agency and resource dependence theories. For this purpose, the data was collected from 188 non-financial firms listed in Pakistan Stock Exchange for the period of 2010-2016. The present study utilized regression with ordinary least square method to achieve the research objectives. The findings revealed that the foreign directors, board size, female' directors, directors' education, prestigious education and directors' interlocks as well as concentrated ownership, foreign ownership and family ownership have significant relationship with firm performance. However, the direct effect of independent directors on firm performance its not' significant. Meanwhile, the findings also showned that innovation mediates the relationship of independent directors and foreign directors, board size, female directors, director's education, prestigious education as well as concentrated ownership and foreign ownership on firm performance, except directors' interlocks and family ownership. Based on the empirical results the current study also suggested that Pakistani firms should invest in innovation to increase their performance

Integrating agency and resource dependence theories to examine the impact of corporate governance and innovation on firm performance

AbstractThis study aimed to investigate the mediating role of innovation between corporate governance and firm performance. The theoretical foundations of this study were the agency and resource dependence theories. The data were collected from annual reports of non-financial firms listed on the Pakistan Stock Exchange and spanned the period from 2010 to 2019. The direct impact of corporate governance was evaluated using Driscoll Kraay’s standard errors, while for the mediating role of innovation, each indirect impact was separately examined using the bootstrapping technique in Stata. Interestingly, the study found significant support for a direct impact of corporate governance variables on firm performance, except for independent directors. The indirect impact of corporate governance on firm performance was also appraised, except for directors’ interlocks and family ownership. Based on the findings, the study suggests that firms can achieve higher performance by effectively using embedded resources from the corporate governance structure and innovation

Defendants negligence causing nervous shock or psychiatric injury to plaintiff/claimant: a critical appraisal

In the common law jurisdictions including Malaysia, the tort of negligence is based on the existence of a duty of care owed by the defendant to the plaintiff/claimant. The law has developed over time to include many instances where duty of care exists. Psychiatric injury is an aspect of negligence concerned with mental harm which has been caused through the negligent act of another. The essential question to be asked is the degree of proximity which is required when a person has suffered psychiatric damage as a result of the defendant’s negligent act. Initially the plaintiff could only succeed if he was also within the range of physical impact, i.e. only the ‘primary’ victim could sue. Later liability was extended to secondary victim. The appropriate test became foreseeability of the shock, but the problem is when shock is foreseeable? It is suggested the court in fact created ‘sub-rules’ or guidelines which indicated the kind of cases where proximity in the legal sense would exist. In Alcock v Chief Constable of South Yorkshire [1991] WLR 1057, the House of Lords appears to have adopted a compromise position whereby the test is one of ‘foresight’, but one where foresight has a coded meaning. So where the plaintiff has suffered psychiatric damage the test of proximity which is required to establish a duty of care is ‘foresight’ as determined in the light of the relevant guidelines, as to whether victim is the primary victim. The paper aims to give a critical appraisal of the unsatisfactory state of the law particularly in the case of secondary victim, suggesting reform in the light of many criticisms by leading authorities

Arresting the Malaysian judiciary’s ambivalent syndrome concerning the quantum of proof in allegations of fraud in civil cases – in the interest of certainty in the law

It has been settled law in Malaysia that the quantum of proof in civil courses is on a balance of probabilities. Even if the allegation is fraud, still the balance of probability standard applies. Though the civil court when considering a charge fraud will naturally require for itself a higher degree of probability than that which it would require when negligence or breach of contract is established. It does not adopt so high a degree as a criminal court, but still it does require a degree of probability which is commensurate with the occasion. However, this traditional position has been departed from a series of apex court decisions which had held that in civil cases the quantum of proof required in allegations of fraud is beyond a reasonable doubt. The Apex court has even gone to the extent of pronouncing that this is the common law of Malaysia. Then there is another view which enunciates that the quantum of proof required in allegations of fraud in civil cases will depend on the nature of fraud. If the nature of the fraud alleged is criminal, than the amount to evidence required to prove that allegation is the criminal standard of beyond reasonable doubt. If the nature of fraud is civil, then civil standard of balance of probabilities suffices. This ambivalent judicial attitude has now been compound by a recent 2015 apex court decision, that all is required to prove fraud is just on a balance of probabilities, irrespective of the nature of the allegation. The paper seeks to analyse the law on this matter by looking at the judicial attitudes of other common law jurisdictions such as Australia, Singapore and the United Kingdom and suggest that the Malaysian judiciary adopt a consistent approach that will be a conduce clarity, instead of creating confusion in this critical area of the law