Click here to download

A measure of the sustainable connection between highest remunerations’ and economic performance
Author/s: Martina Vallesi 
Year:  2013 Issue: Language: English 
Pages:  15 Pg. 145-159 FullText PDF:  947 KB
DOI:  10.3280/RISS2013-002008
(DOI is like a bar code for intellectual property: to have more infomation:  clicca qui   and here 

Focusing on the agency conflict between manager and shareholders and on the definitions of tunneling and propping, we delve into the related party transactions between a group and its management. Firstly, the paper examines actual and previous information to disclose for directors board remunerations (as for IAS, Consob and TUF). Such remunerations are based on a contract with legal and moral managers obligations to the companies of the group they run and to the stakeholder of such companies. For this reason, a balance between their remunerations and their performance is necessary to achieve preserving the interests of all the subjects involved in the companies’ activities and maintaining the continuity of the group. Then, using regressions, we measure, in a sample of listed companies, if there is a significant and sustainable connection between particular remunerations of the highest paid members of the directors board and the economic group performance.
Keywords: Agency theory, directors’ board remuneration, related party, related party transactions.

  1. Berle A.A., Means G.C. (1932). The Modern Corporation and Private Property. New York: Macmillan.
  2. Bird F., Waters J. A. (1987). The Nature of Managerial Moral Standards. Journal of Business Ethics, 6: 1-13,, DOI: 10.1007/BF00382943
  3. Carroll A. (1991). The pyramid of CSR: toward the moral management of organisational stakeholders. Business Horizons, pp. 39-48,, DOI: 10.1016/0007-6813(91)90005-G
  4. Chen Y., Chen C. H., Chen W. (2009). The impact of related party transactions on the operational performance of listed companies in China. Journal of Economic Policy Reform, 12, 4: 285-297,, DOI: 10.1080/17487870903314575
  5. Cheung Y. L., Jing L., T. Lu, P.R. Rau, Stouraitis A. (2008). Tunneling and propping up: An analysis of related party transactions by Chinese listed companies. Pacific-Basin Finance Journal.
  6. Cheung Y. L., Rau P. R., Stouraitis A. (2006). Tunneling, propping and expropriation: evidence from connected party transactions in Hong Kong. Journal of Financial Economics 82: 343-386,, DOI: 10.1016/j.jfineco.2004.08.012
  7. Claessens S., Djankov S., Lang L. H. P. (2000). The separation of ownership and control in East Asian Corporations. Journal of Financial Economics 58: 81-112,, DOI: 10.1016/S0304-405X(00)00067-2
  8. Claessens S., Djankov S., Fan J. P. H., Lang L. H. P. (2009). Corporate diversification in East Asia : the role of ultimate ownership and group affiliation, Policy Research Working Paper Series 2089, The World Bank.
  9. Donaldson T., Preston L. E. (1995). The stakeholder theory of the corporation: concepts, evidence, and implications. Academy of Management Review, 20, 1: 65-69,, DOI: 10.5465/AMR.1995.9503271992
  10. Dezzani F., Biancone P. P., Busso D. (2010). IAS/ IFRS, IPSOA, Gruppo Wolters Kluwer, pp. 892-894.
  11. Fama E.F., Jensen M.C. (1983). Separation of ownership and control. Journal of Law & Economics, 26, 2: 301-325,, DOI: 10.1086/467037
  12. Fama E.F. (1980). Agency Problems and the Theory of the firm. Journal of Political Economic, 88, 2: 288-307,, DOI: 10.1086/260866
  13. Friedman E., Johnson S., Mitton T. (2003). Propping and tunnelling. Journal of Comparative Economics, 31: 732-750,, DOI: 10.1016/j.jce.2003.08.004
  14. Gordon E. A., Henry E., Palia D. (2004). Related party transactions and corporate governance, 9: 1-27.
  15. Hoyle R. H. (1995). The structural equation modeling approach: Basic concepts and fundamental issues. In: Hoyle R. H. (editor). Structural equation modeling: Concepts, issues, and applications. Thousand Oaks, CA: Sage Publications, Inc, pp. 1-15.
  16. IASB. (2003). IAS 24. Related Party Disclosures.
  17. IASB. (2009). IAS 24. Related Party Disclosures.
  18. IASB. (2011). IAS 19. Employee Benefits.
  19. KPMG. IFRS Briefing Sheet. (November 2009). IAS 24. Related Party Disclosures.
  20. Jensen M.C., Meckling W.H.. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 4: 305-360,, DOI: 10.1016/S0022-5193(76)80085-9
  21. Jian M., Wong T. J. (2008). Propping through related party transactions. Springer Science+Business Media, LLC.
  22. Jones T. M., Wicks A. C. (2009). Convergent stakeholder theory. Academy of management review, 24, 2: 206-221,, DOI: 10.5465/AMR.1999.1893929
  23. Johnson S., La Porta R., Lopez De Silanes F., Shleifer A. (2000). Tunneling. American Economic Review, 90, 2: 22-27,, DOI: 10.1257/aer.90.2.22
  24. KPMG (2012). Insights into IFRS. KPMG’s pratical guide to international Financial Reporting Standards. Vol 1. 9th Edition 2012/2013.
  25. La Porta R., Lopez-de-Silanes F., Shleifer A., Vishny R. (2000). Investor protection and corporate valuation. Journal of Finance, 57: 1147-1170,, DOI: 10.1111/1540-6261.00457
  26. Paine L. S. (1996). Moral thinking in management: An essential capability. Business Ethics Quarterly, 6, 4,, DOI: 10.2307/3857500
  27. Pizzo M. (2013). Related party transactions under a contingency perspective. Journal of Management and Governance,, DOI: 10.1007/s10997-011-9178-1,309-330
  28. TUF. Consolidated law on finance, Legislative Degree n. 58 of 24th February 1998.

Martina Vallesi, in "RIVISTA DI STUDI SULLA SOSTENIBILITA'" 2/2013, pp. 145-159, DOI:10.3280/RISS2013-002008


FrancoAngeli is a member of Publishers International Linking Association a not for profit orgasnization wich runs the CrossRef service, enabing links to and from online scholarly content