DIRECTORS’ REMUNERATION AND FINANCIAL PERFORMANCE

Abstract

The attention of the general public has been lately drawn to the subject of corporate governance due to its obvious significance in the area of economic and financial wellbeing of organizations and that of the society at large. Following a series of widespread corporate scandals that resulted in the collapse of previously prominent companies the attention of various groups of stakeholders has been drawn towards the significance of corporate governance. One of the specific issues of concern is the remuneration of the directors. Agitations regarding excessive remuneration packages of directors have been added to the ongoing concern about the widening gap between the remuneration of executives and ordinary employees, as well as their large termination payments with perceived lack of justification. Since the beginning of the 21st century, there has been increased public scrutiny of escalating levels of remuneration of directors across the globe. Thus, this study examined the effect of directors’ remuneration on corporate financial performance. The study employed ex-post facto research design using panel data for the periods under study (2009-2018). The scope of the study comprised of the three hotels listed in the Nigerian Stock Exchange as at December 2018. Necessary data were obtained from the audited financial reports of the selected companies. The results of the regression analysis revealed the existence of a positive significant relationship between directors’ remuneration and corporate financial performance. This study recommends that corporate board members should be well remunerated, this will go a long way in boosting their moral for effective discharge of their duties.