A contemporary approach for mitigating agency conflicts: A conceptual review

Abstract

Excessive CEO compensation can be justified in any way as it can raise severe agency conflicts in a firm. Cases of excessive CEO compensation have observed all over the world, therefore, this paper propose significant solution to mitigate agency conflicts. This paper surveys the recent literature of CEO compensation and its determinants. Along with previous conventional determinants, this study proposed a new determinant, i.e. market share, which is omitted by prior studies and should be statistically validated with CEO compensation. Moreover, this study proposed plausible moderators, namely, corporate governance (ownership structure and board characteristics), dividend policy and risk taking. This study has provided enough evidences and room for research, which will benefit researchers in term of future empirical studies on different markets in the world.