REMUNERATION COMMITTEE DIVERSITY AND EXCESS CEO PAY: THE MODERATING EFFECT OF FAMILY OWNERSHIP

Shu Chui Lau; Mohd Haniff Zainuldin; Che Ruhana Isa

doi:10.51200/mjbe.v12i2.7083

Authors

Lau S.C
Zainulddin, M.H
Isa, C.R

DOI:

https://doi.org/10.51200/mjbe.v12i2.7083

Keywords:

Malaysia, Remuneration Committee Diversity, Agency Theory, Family Ownership, Excess CEO Pay

Abstract

This study examined how remuneration committee diversity influences their perspectives, which, in turn, influences excess CEO pay using an unbalanced panel of 3,290 public listed firms in Malaysia (2017-2021). The study also explored whether family ownership played a moderating role in this relationship between committee diversity and excess CEO pay. Using an index based on demographic characteristics (gender, age, ethnicity) and cognitive characteristics (education backgrounds, financial expertise, multiple directorship), the study found that aggregate measures better capture diversity than individual attributes. Findings indicated diverse committees exercise greater restraint regarding excess CEO pay, while family ownership reinforces oversight roles, addressing literature gaps across developed and emerging economies. Furthermore, the association between remuneration committee diversity and excess CEO pay was strengthened by family ownership, mitigating type 2 agency conflicts. The study contributes significant influence of a country’s institutional setting on the monitoring effectiveness of remuneration committee diversity which contributes to the ongoing discussion on excessive CEO pay.

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