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THE IMPACT OF DIRECTORS’ TENURE ON EXECUTIVE COMPENSATION AND CORPORATE FINANCIAL PERFORMANCE

Sylvie Berthelot, Julien Bilodeau, Katy Davignon

DOI: 10.22495/cocv10i2c1art2

Abstract

This research examines the impact of the tenure of independent directors on senior executives’ compensation and corporate financial performance. We assume that as the term of tenure or seniority of directors usually defined as “independent” increases, their independence can become compromised because of the relationships they build with corporate executives. The results show that although the tenure of independent directors has a positive impact on senior executives’ compensation, it has no significant impact on corporate financial performance. This result tends to support the contention that seniority should be taken into account in studies using director’s independence as a variable.

Keywords: Director’s Tenure/Seniority, Board of Directors, Corporate Governance, Executive Compensation, Financial Performance

How to cite this paper: Berthelot, S., Bilodeau, J., & Davignon, K. (2013). The impact of directors’ tenure on executive compensation and corporate financial performance. Corporate Ownership & Control, 10(2-1), 164-172. http://doi.org/10.22495/cocv10i2c1art2

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