Market Competition, Managerial Incentives and Agency Cost

Rayenda Khresna Brahmana, Hui San Loh, Maria Kontesa

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


This study investigates the determinants of board of director compensation from the view of strategic management. Specifically, this study examines the association between product market competition and directors’ compensation for a sample of 524 listed firms in Malaysia from 2010 to 2014. We find that there is a positive relationship between a competitive firm and its compensation to its directors. Our research indicates that managerial incentives reflect more of talent appreciation, rather than purely for acknowledging better performance or a bigger size firm. This research contests the use of agency theory and managerialism in explaining directors’ compensation, especially for the developing country context of Malaysia. Our findings also imply that firms may pay higher compensation in a competitive market.

Original languageEnglish
Pages (from-to)937-955
Number of pages19
JournalGlobal Business Review
Issue number4
Early online date18 Jun 2019
Publication statusPublished - 1 Aug 2020
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2019 International Management Institute, New Delhi.


  • agency cost
  • director incentives
  • managerial compensation
  • managerialism
  • Product market competition

ASJC Scopus subject areas

  • Business and International Management


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