The link between executive remuneration incentives and regulatory noncompliance
Abstract
This study examines how executive remuneration structures relate to corporate misconduct in the form of regulatory noncompliance. Using a panel of US firms over the past 25 years, we link subsidiary-level violations of all major areas of corporate regulation (e.g., antitrust or employment law) to parent-company executive remuneration. We find that equity-based compensation is positively associated with regulatory noncompliance, whereas higher fixed remuneration relative to firm size significantly reduces it. These findings provide novel evidence on the unintended consequences of equity-based incentives and are relevant for boards, remuneration committees, and regulators concerned with executive pay design and compliance risks.
Fields of Study & Subjects
Corporate Finance and Governance
Auditing
Earnings Management
Governance
Regulation and Compliance Studies
Publication details
- Journal / source
- Maandblad Voor Accountancy en Bedrijfseconomie
- Volume
- 100
- Issue
- 2
- Pages
- 59–68
- Publication date
- 12 March 2026
- Language
- EN