Corporate governance and executive remuneration in Brazil

Abstract

Executive remuneration has gained importance both in the academic and corporate fields, especially with the outcome of the scandals involving executives from large North-American corporations in the 2000’s. In the international literature, there are many studies about executive remuneration and how it relates to agency theory and corporate governance. However, there are a few studies about executive remuneration in the Brazilian market, and most of them are qualitative. One of the great problems of research in this area is the difficulty in obtaining data about executive remuneration in Brazil. These data, when available, are very aggregated and not very clear. The objective of this paper is to analyze the determinants of executive remuneration in Brazil, and the relation between executive remuneration and corporate governance. This research is original in Brazil, bringing a great contribution to the literature of corporate governance. Our results indicate that companies with bad governance tend to pay greater remuneration to their executives. Moreover, companies paying greater remuneration perform worse in the future. In other words, paying more to executives does not result in better profitability in the future