Mediating effect of ESG performance on executive incentive compensation-financial performance relationship: evidence from MENA banking sector

IF 5.5 Q1 BUSINESS

Corporate Governance-The International Journal of Business in Society Pub Date : 2023-09-20 DOI:10.1108/cg-02-2023-0065

Abdelhakim Ben Ali, Jamel Chouaibi

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引用次数: 0

Abstract

Purpose This study aims to investigate whether integrating environmental, social and governance (ESG) practices mediates the relationship between executive incentive compensation and the financial performance of Islamic and conventional banks in the Middle East and North Africa (MENA) region. Design/methodology/approach This study used multiple regression models to analyze the effectiveness of ESG practices as a mediating variable in explaining the relationship between executive incentive compensation and banks’ financial performance between 2015 and 2021. The sample consisted of 57 Islamic and conventional banks operating in the MENA region, and the data were collected from the Thomson Reuters database (Data Stream). Findings This research paper showed the positive and significant mediating effect of the ESG practice on Banks’ financial performance. Thus, banks’ financial and stock market profitability is influenced by ESG information disclosure. This finding shows that taking ESG into account improves the relationship between executive incentive compensation and banks’ financial performance. Practical implications The results may interest academic researchers, regulators and policymakers and would support stakeholders and decision-makers who wish to discover how executive incentive compensation affects financial performance in banks. Originality/value This study contributes to previous literature by studying the mediating effect of ESG practices on the relationship between executive incentive compensation and banks’ financial performance. Indeed, the originality of this research paper is justified by the scarcity of studies and, to the best of the authors’ knowledge, constitutes one of the first attempts to examine this relationship via a mediating variable, i.e. ESG.

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ESG绩效对高管激励薪酬-财务绩效关系的中介作用:来自中东和北非银行业的证据

本研究旨在探讨整合环境、社会和治理(ESG)实践是否在中东和北非(MENA)地区伊斯兰银行和传统银行高管激励薪酬与财务绩效之间的关系中起中介作用。本研究采用多元回归模型，分析了ESG实践作为中介变量在解释2015 - 2021年高管激励薪酬与银行财务绩效之间关系中的有效性。样本包括在中东和北非地区经营的57家伊斯兰银行和传统银行，数据收集自汤森路透数据库(data Stream)。研究结果表明，ESG实践对银行财务绩效具有显著的正向中介作用。因此，ESG信息披露会影响银行的财务和股票市场盈利能力。这一发现表明，考虑ESG可以改善高管激励薪酬与银行财务绩效之间的关系。研究结果可能会引起学术研究人员、监管机构和政策制定者的兴趣，并为希望发现高管激励薪酬如何影响银行财务绩效的利益相关者和决策者提供支持。本研究通过研究ESG实践在高管激励薪酬与银行财务绩效关系中的中介作用，对以往文献有所贡献。事实上，这篇研究论文的独创性是由研究的稀缺性所证明的，据作者所知，它是通过一个中介变量(即ESG)来检验这种关系的第一次尝试之一。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Corporate Governance-The International Journal of Business in Society BUSINESS-

CiteScore

11.20

自引率

33.90%

发文量

期刊介绍： Providing a consistent source of in-depth information, analysis and advice considering corporate governance on an international scale, Corporate Governance: The International Journal of Business in Society focuses on knowledge development, practice and performance standards for scholars and Boards of Directors/ Governors of companies throughout the world. The journal publishes a diverse range of substantive theoretical and methodological debates as well as practical developments in the field of corporate governance worldwide. The journal particularly encourages attention to the impact of changes of business/corporate governance forms and practices on people, and the sustainability of different governance models. Articles that highlight models and structures that advance the interests, dignity and well being of all stakeholders, in a sustainable manner, are particularly welcome. The journal covers a broad spectrum of governance-related themes including: -Effective boardroom performance -Control and regulation -Executive leadership -The role and contribution of external (non-executive) directors -The growing importance of governance in the wake of ever-greater corporate scandals -Redefinitions and reassessments of corporate governance models -The role of business in society -The changing nature of the relationship and responsibilities of the firm towards various stakeholders -The incentives required to encourage more socially- and environmentally-responsible corporate action -The role and impact of local and international regulatory agencies and regimes on corporate behaviour.