Abstract
The purpose of this article is to investigate whether compensation (i.e. salary, bonus and allowances) offered to chief executive officers and executives affect the performance of Takaful (i.e. Islamic insurance) companies in Pakistan. Data was collected from annual reports of Takaful companies during 2007-2015 to estimate the relationship between compensation and accounting-based performance measures such as return on assets (ROA), return on equity (ROE) and earnings per share (EPS). It is worth mentioning that Takaful companies are unquoted on Pakistan Stock Exchange that is why only accounting-based performance measures used in this paper. Results indicate that compensation offered to CEOs and executives is statistically significant and negatively related to all performance measures. Descriptive statistics indicate that mean ROA and ROE are negative while mean EPS is positive but it is too small to dispense among shareholders. Although Takaful companies are offering reasonable compensation to CEOs and executives but their performance is weak which may be due to absence of monitoring from the market participants. In sum, offering reasonable compensation to CEOs and executives despite poor performance indicates the prevalence of weak governance structures that leads to agency problems.
Keyword(s)
A PHP Error was encountered
Severity: Notice
Message: Undefined variable: pub_keywords
Filename: front/publication.php
Line Number: 77
Backtrace:
File: /home/prdbpk/public_html/application/views/front/publication.php
Line: 77
Function: _error_handler
File: /home/prdbpk/public_html/application/controllers/Front.php
Line: 221
Function: view
File: /home/prdbpk/public_html/index.php
Line: 315
Function: require_once
A PHP Error was encountered
Severity: Warning
Message: Invalid argument supplied for foreach()
Filename: front/publication.php
Line Number: 77
Backtrace:
File: /home/prdbpk/public_html/application/views/front/publication.php
Line: 77
Function: _error_handler
File: /home/prdbpk/public_html/application/controllers/Front.php
Line: 221
Function: view
File: /home/prdbpk/public_html/index.php
Line: 315
Function: require_once
A PHP Error was encountered
Severity: Notice
Message: Undefined variable: pub_info
Filename: front/publication.php
Line Number: 84
Backtrace:
File: /home/prdbpk/public_html/application/views/front/publication.php
Line: 84
Function: _error_handler
File: /home/prdbpk/public_html/application/controllers/Front.php
Line: 221
Function: view
File: /home/prdbpk/public_html/index.php
Line: 315
Function: require_once