INCENTIVES AND REGULATORY RISKS: THE LINK BETWEEN EXECUTIVE REMUNERATION STRUCTURES AND ORGANIZATIONAL MISCONDUCT
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2025-07-04
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en
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This thesis investigates the relation between executive remuneration structures and corporate regulatory violations, addressing how different payment structures might encourage strategic non-compliance. Utilising a comprehensive dataset and Negative Binomial Fixed Effect panel data regressions, the analysis linked, given the available data, subsidiary-level regulatory violations to parent-level executive data. A positive association was identified between the Equity Linked Remuneration Ratio (‘ELRR’) and the number of regulatory fines imposed on firms. Furthermore, Relative Executive Salary (‘RES’) inversely correlated with the number of fines imposed, suggesting non-equity linked pay may deter risk-taking in the form of strategic non-compliance. Conversely, the Wealth Delta (‘WD’) positively correlated, implying equity-linked incentives foster short-term profit maximisation-behaviour through strategic non-compliance. These findings highlight how the structure of executive remuneration incentives contribute to a misalignment in executive and shareholder interests, as evidenced by the posited increase in strategic non-compliance. Robustness checks largely affirmed these conclusions, though further empirical research is recommended for a more comprehensive understanding.
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Faculteit der Managementwetenschappen