EXECUTIVE COMPENSATION, CORPORATE SUSTAINABILITY CONCERNS AND COMPANY FINANCIAL PERFORMANCE IN INDONESIAN COMMERCIAL BANKING
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Date
2019-01
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Fakultas Ekonomi Universitas Widyatama
Abstract
This research explores the potential influence of executive compensation on
corporate sustainability concerns and company financial performance.
Interestingly, by investigating the pay-for-performance relationship, this study
finds that executive compensation has a direct significant positive impact on
corporate sustainability concerns and both company financial health and market
value performance.
Meanwhile, by adopting a shareholder perspective, this study reveals that higher
executive compensation can encourage managers to adopt more corporate
sustainability concerns for the shareholders' and/or managers' benefits; however,
this will reduce the firm's value. Moreover, a counter-balance mechanism occurs
when employs the stakeholders' perspective is employed. High executive
compensation motivates managers to implement more corporate sustainability
concerns to serve all stakeholders’ interests, which may to increase the firm's
market value through company financial health.
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