Beyond Agency Theory: A Three-Paradigm Approach to Executive Compensation

-- Xavier Baeten, David Balkin and Lutgart Van den Berghe

Executive compensation has an extensive research history. Although agency theory is an important theoretical framework used in this research, the failure to find a link between performance and compensation has stimulated the development and application of other theoretical lenses originating in diverse management disciplines. This paper proposes three main paradigms underlying theories on executive compensation—control, social-psychological and fit paradigms. It then allocates 18 theories mentioned in research on executive compensation to each of these paradigms and discusses the implications. The resulting synthesis provides new insights for research and practice in the field of executive compensation.

© 2011 IUP. All Rights Reserved.

Corporate Governance in Public and Private Sector Enterprises: Evidence from India

-- Neeti Sanan

There is a large variation in the quality of corporate governance practices adopted by firms even when they are subject to the same contractual environment. Therefore, it is possible that firms within the same country have widely divergent standards of overall corporate governance. This leads to the fact that different Indian firms could have varying standards of corporate governance disclosure. The present study aims to provide an understanding of corporate governance disclosure levels of Indian companies in the private and public sector. It provides useful insights into comparing and contrasting corporate governance practices of public and private sector companies in India by developing a Corporate Governance Disclosure Score (CGDS). Research in the field of corporate governance disclosure during recent years has mainly focused on the disclosure practices in the annual reports of firms. In conducting this research also, annual reports for the year 2008-2009 of 77 listed Indian companies have been used as a main source of information. While 48 of these companies belong to the private sector, 29 belong to the public sector. The sample is drawn from across eight industries. The study uses the univariate parametric t-test and non-parametric Mann Whitney test for comparing means, and the results indicate that there is a significant difference between the CGDSs of public and private sector companies in India.

© 2011 IUP. All Rights Reserved.

Insights into Governance at Wipro Ltd.: A Case Study

-- Shashank Shah

In the words of the Birla Committee, ‘Corporate Governance is the blood that fills the veins of transparent corporate disclosure and high quality accounting and the muscle that moves a viable and accessible financial reporting structure.’ This paper highlights two important stakeholders who are the core of Governance of any corporate organization—shareholders and government. The shareholders provide funds for the actual functioning, expansion and diversification of the organization through the purchase of its shares, debentures or securities and in exchange for this investment, expect some tangible and monetary return either in the form of dividends or interest or sometimes if the company is extremely successful, through the issue of bonus shares. The government regulates the working of corporate organizations through formulation of regulations which organizations need to follow both in letter and spirit. In this paper, the authors have attempted to study the shareholder and government-related practices of Wipro Ltd.—a leading Indian IT company. The case study is based on triangulation of data based on personal interviews with top executives of the company, responses to an executive perception survey and supplementary information available in the public domain. It was observed through this case that though Wipro Ltd. is predominantly a family-owned organization, it has endeavored to maintain transparency and accountability in its governance mechanisms as is typical of a professional organization.

© 2011 IUP. All Rights Reserved.