Financial Performances and Bank Presidents Compensation Case of Ethiopian Commercial Banks
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Date
2014-06
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Publisher
Addis Ababa University
Abstract
The purpose of this study is to examine theimpact of financial performances on presidents’
compensation in Ethiopian commercial banks. In light of this objective the study adopted
mixed research approach using 8 commercial banks operate in Ethiopia.These banksare
operatesin the industry for the last 10 years i.e. from 2004 up to 2013. Thus, the study used a
total of 80 observations. The study used documentary reviews of annual reports and in-depth
interviews to test stated research hypotheses and to answer the research questions. The data
was mainly analyzed on quantitative basis using Eviews 6 software, OLS regression analysis.
Further, arguments were made by the support of in-depth interviews.The results showed that
performance of banks have no impact on president compensation of Ethiopian commercial
banks. However, the result showed a significance negative relationship between ownership
and president compensation. In addition, the study founds a positive significance relationship
between bank size and president compensation. Furthermore, the study found a negative
insignificance
relationship
between
capital
adequacy,
inflation
and
president
compensation.The study also found that one period lagged value of compensation is the main
determinants of compensation. Thus, commercial banks in Ethiopia should give
considerations for performance and inflation to align share holder interest with that of
president.
Keywords: performance, president compensation, ownership, bank size, capital adequacy
ratio, inflation, lagged value and share holder interest
Description
Keywords
performance, president compensation, Ownership, Bank size, capital adequacy ratio, Inflation, Lagged value and share holder interest