Disclosure Factors of Executive Managers Remuneration: A Probit Model

Abstract

Executive managers’ remuneration has been an issue of debate for the last 30 years. Practitioners and academics are arguing for the mechanisms, mix, level, time horizon and goal. Disclosure or not of information regarding these issues preoccupies regulating, legislative authorities as well as capital market participants. The issue of remuneration is considered to be closely connected with financial performance (positively), firm size (positively), the organizational structure (negatively) and corporate governance mechanisms (negatively). Furthermore, a connection of ownership structure and executives’ remuneration has been well established (theoretically and empirically) in the literature (agency theory). The paper, using a Probit regression analysis, examines whether these relationships are valid in Greece. Greece hasn’t the characteristics of an Anglo-Saxon country. Overall the study has shown that remuneration levels in Greece are defined by a different set of factors than the ones that are prominent in an Anglo-Saxon country. The major factors that affect the disclosure of information about the remuneration levels are 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 member of the board of directors dismissals, and the quality of corporate governance. These factors indicate that Greek firms are disclosing information about the remuneration levels when the investment effort and the quality level of corporate governance are high.