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Ownership Structure and the CEO Compensations: An Empirical Study on Bahrain Commercial Banks |
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PP: 37-54 |
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Author(s) |
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Hessa Ali Alkooheji,
Mohammad Salem Oudat,
Basel J. A. Ali,
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Abstract |
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| The present paper aims to investigate the relationship between the ownership structure and the CEOs compensation for commercial banks listed on Bahrain Bourse. The sample consisted of published data for seven Bahraini banks from 2015 to 2019. The study employed Panel Data as this type of data includes both Cross-Sectional Data and Time-Series Data, which consider individual and time factors whose effects on the dependent variable cannot be observed. Data were collected and extracted from the annual financial reports of the 7 Bahraini commercial banks from 2015 to 2019. The results showed a negative statistically significant relationship between institutional ownership, foreign ownership, and the executive directors compensation. Moreover, institutional ownership and foreign ownership decreased the compensation paid to the CEO. In addition, there was a positive statistically significant relationship between family ownership and the executive director’s compensation. Also, the greater the family ownership, the greater the compensation paid to the CEO. Furthermore, there was no statistically significant relationship between the administrative ownership, the size of the bank, the age of the bank and the compensation of the CEO. Besides, the administrative ownership did not affect the compensation paid to the CEO. The study recommends that the authorities should encourage commercial banks to use administrative ownership in achieving convergence of interests between management and shareholders to restrict the beneficial behavior of management as well as consider the possibility of developing appropriate mechanisms to protect the rights of individual shareholders from the consequences of the problem of information discrepancy. |
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