Executive compensation in less regulated markets: the impact of debt monitoring

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This paper shows that in the lightly regulated Alternative Investment Market (AIM) voluntary corporate board structures might not reduce agency costs between shareholder and executive directors. In this less regulated market we find that the extent of debt affects executive pay. Also the theoretical determinants of executive pay affect CEO and other executives' pay and incentives differently in this market. We find no evidence that debt levels affect CEO pay in a matched sample of Main Market firms. Our results suggest that debtholders could be better monitors of executive directors' actions, in comparison to voluntary governance committees in less regulated markets.
Original languageEnglish
Pages (from-to)1883-1918
Number of pages36
JournalEuropean Journal of Finance
Issue number18
Early online date23 Sep 2019
Publication statusPublished - 1 Oct 2019


  • debt monitoring
  • corporate governance
  • board structures
  • executive compensation
  • executive incentives
  • less regulated markets

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