The Us And Australian Corporate Backgrounds Essay

The Us And Australian Corporate Backgrounds Essay

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The US and Australian corporate backgrounds both differ in industry and company level. With respect to the former, differences are observed in the industry mix of firms characteristics across the two economies. Specifically, a greater concentration of mineral resources public companies is observable in Australian market. For instance, these firms constitute 26% of our sample for the period 2003-2013. With respect to the firm-level differences are also highlighted in both economies. For instance, Schultz et al. (2013) note that board of directors are normally both smaller and have a lower fraction of non-executive directors. Thus, many small resources companies listed on ASX are interested in hiring directors based on their skills and experience rather than their independence (Schultz et al., 2013 and ASX, 2009). However, despite the fact boards of directors in Australian companies are characterized by a larger share of non-independent directors and the frequency with which the CEO also acts as the chairman of the board, the percentage is lower than in the US (Schultz et al., 2013 and Fernandes et al., 2012). Dissimilarities are also noticeable in the way CEO is remunerated: while the payment of United States CEOs is heavily based on shares and options payment, salary and other fixed component of remuneration paid to Australian CEOs constitute a greater part of their overall remuneration ( Hill et al., 2011; Schultz et al., 2013 and Fernandes et al., 2012). For instance, 46% of Australian CEOs’ pay is rewarded as fixed salary and only 18% of all remuneration is rewarded as stock and options (Fernandes et al., 2012 and Schultz et al., 2013). This is in sharp contrast to the US, where these two components account for 25% and 39% o...

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...uance of AASB 1046 in 2004 which brought about significant improvements in the quality and extent of remuneration disclosure (Clarkson et al., 2006). The CLERP9 amendments requiring an audited remuneration report and an advisory shareholder vote on the remuneration report at the AGM also served to focus greater board and public attention on executive pay practices. Finally, throughout the period above, executive remuneration has been subject to increasing levels of public scrutiny and debate, but especially so after the GFC (Global finance Crisis). That is the reason why we decided to examine the impact of corporate governance on Pay-Performance relationship under two subperiods: before (GFC) and after GFC. The data used in the present study range from 2003 to 2013 and, therefore, the reported results use the data disclosed under the 1987 band disclosure regulations.

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