Director’s Pay and Firm’s Performance – Comparative Study of Auto Sector Firms of Two Emerging Markets

Abstract

This study aims to explore the relationship between Directors' Remuneration (DR) and financial performance (CP) of the Indian and  Pakistani automobile firms.  This study performed the empirical analysis on the Director’s remuneration data and created the link with the firm accounting indicators ROA and  ROE. Besides Correlation analysis between DR and ROA, ROE was performed for analysis of the relationship among variables. This study used the Firm size (FZ) as the moderator and found important results.  From the accounting indicators of ROA and  ROE, this study found a positive relationship between DR and  ROA ROE of the firms of two emerging countries. This study found a negative relation between FZ with ROA and  ROE of the firms.  Future studies can be done by more no of companies sample or sectors and taking more economies in the sample. Further research can be possible by using non-cash-based compensation, a multivariate analysis technique, or qualitative data collection methods.  The present study explained the relationship of DR and ROA, ROE of the automobile sector of two emerging economies by taking FZ as the moderator which is none of the studies in both countries has been so far. This study has also checked the effect of FZ on the intrinsic or accounting basis performance of the companies. This study can be a guide for new investors or policymakers for the automobile sector of both countries.