The Use of Non-financial Performance Measures: Does the Strength of Corporate Governance Matter?
DOI:
https://doi.org/10.33423/ajm.v19i5.2626Keywords:
Management, Non-Financial Performance Measure, Board Oversight, Board Characteristics, Corporate GovernanceAbstract
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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