Correlation between Directors’ remuneration and the firm's activities based on Return on Asset and Share Price

This study investigates the relationship between Directors’ remuneration and companies’ performance based on Return on Asset and Share Price. Secondary data from ANZ Banking Group Limited Company and Alumina Limited is used to answer the research question. The study aims to establish the correlation between the two variables and how they affect each other. The merged articles reference list includes studies by Borlea, Achim, & Mare (2017); Barenbaum, O’Rourke, & Schubert (2017); and Rashid (2018) which provide vital literature for the research.

Name: BUSN20019 Assignment 1.1
Correlation between Directors’ remuneration and the firm's activities based on Return on
Asset and Share Price
Field of research: The decisions taken by directors have a direct impact on companies’
performance in the industry. Many organisations apply the pay-for-performance theory which
focus on compensating the directors based on the organizational performance. The executive
tend to put extra effort to improve a company’s performance when their remuneration is
depend of it. Studies have established a direct relationship between directors’ remuneration
and company’s performance. Clearly directors’ remuneration and a company’s performance
are dependent of each other. This study seeks to investigate the correlation between
Directors’ remuneration and the firm's performance based on Return on Asset and Share
Price.
Secondary Data: The secondary data will be obtained from two ASX listed companies, that
is, the ANZ Banking Group Limited Company and the Alumina Limited. A two-year 2017
financial and review report of the two companies will be obtained from their official
websites, that is, http://www.rns-pdf.londonstockexchange.com/rns/5969V_-2017-11-6.pdf
for the ANZ Banking Group’s 2017 financial report and
https://www.aluminalimited.com/latest-annual-report/ for Alumina Limited’s 2017 financial
and review reports.
RQ (Research Question): The study will investigate the relationship between Directors’
remuneration and companies’ performance based on Return on Asset and Share Price.
Specific RQ: How does Directors’ remuneration affect a company’s performance based on
Return on Asset and Share Price?
Variables: Firm’s activities and Directors’ remuneration
Search terms: Directors’ benefits and remuneration; Organizational performance; ANZ
Group Limited; Alumina Limited; Financial reports; Return on Assets; and Share price.
Merged articles Reference List: The studies by Borlea, Achim, & Mare (2017);
Barenbaum, O’Rourke, & Schubert (2017); and Rashid (2018) investigated the relationship
between executives’ remuneration and company performance. The four studies established a
correlation between the two variables. In a performance-based pay system, the executives are
likely to focus on increasing a company’s financial earning to increase their income. The
studies were conducted outside Australia and cannot be used as a true representation of the
relationship between firms’ performance and directors’ remuneration. However, the studies
provide vital literature for the research.
Barenbaum, L., O’Rourke, B., & Schubert , W. (2017). The Impact of Share-Based
Compensation. New York: Strategic Finance.
Borlea, S. N., Achim, M. V., & Mare, C. (2017). Board characteristics and firm performances
in emerging economies. Lessons from Romania. Journal of Economic Research,
Volume 30, Issue 1.
Rashid, A. (2018). Board independence and firm performance: Evidence from Bangladesh.
Future Business Journal, Volume 4, Issue 1, June 2018, Pages 34-49.