Director' Remuneration and Performance in the Big Four Australian Banks

Master's Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, Swinburne University of Technology, Melbourne (Swinburne University of Technology), language: English, abstract: A substantial and influential literature demonstrates conflicting evidence that director remuneration is either positively or negatively correlated with corporate performance. In some instances, studies suggested to have no link between director remuneration and corporate performance. Research interest in this topic has been further fuelled with the collapse of many multinational companies such as Lehmann Brothers, Meryll Lynch during the recent global financial crisis. Prior Australian studies, also present a mixed opinion on the link between director remuneration and firm performance. In this research, a re-examination of the link between director remuneration and firm performance in the big four Australian banks is being conducted. Various literature sources such as government reports, journal articles and newspaper articles have been reviewed to acknowledge pervious research findings and help identify a sizeable gap. This research uses both financial data and non-financial data in analysing the various hypothesis presented. Financial data is retrieved from databases such as Aspect Fin Analysis and banks annual report. In terms of non-financial data, this paper retrieves them from various newspaper articles discussing job cut and branch closures. Overall this research has found that there exists no relationship between director remuneration and firm performance in the big four banks for the period pre, during or post Global Financial Crisis. These findings also hold true with a one year lag and lead and goes on to suggest that the relationship between the variables (director remuneration and performance) does not forge a link in the long term as well.