The Use of Non-financial Performance Measures: Does the Strength of Corporate Governance Matter?

Authors

  • Huiqi Gan University of Massachusetts Lowell
  • Melloney C. Simerly Western Kentucky University

DOI:

https://doi.org/10.33423/ajm.v19i5.2626

Keywords:

Management, Non-Financial Performance Measure, Board Oversight, Board Characteristics, Corporate Governance

Abstract

This study investigates whether strong board oversight is influential in firms’ choice of incorporating non-financial performance measures (NFPM) in executive compensation. We find that more independent boards, boards with inconsequential entrenchment, larger boards, boards with a higher percentage of reputable directors and gender diverse boards, favor the use of NFPM. These findings suggest the importance of board strength in influencing firms’ decision of using NFPM, and that corporate governance strength should be a priority for maintaining an optimal contracting environment for executives.

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Published

2019-12-30

How to Cite

Gan, H., & Simerly, M. C. (2019). The Use of Non-financial Performance Measures: Does the Strength of Corporate Governance Matter?. American Journal of Management, 19(5). https://doi.org/10.33423/ajm.v19i5.2626

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Section

Articles