THE IMPACT OF VOLUNTARY DISCLOSURE AND TRANSPARENCY ON THE CONTROL OF DIRECTORS' REMUNERATION

The 2008-2012 global financial and economic crisis has once more brought to light the vulnerabilities of the capitalist system and the necessity to impose restrictions on specific actors who possess substantial sway over the trajectory of the economy and business.
The remuneration transgressions that certain boards of directors, particularly in the financial sector, have engaged in have once again demonstrated the significance of agency problems. During this period, instances arose in which Egyptian corporations rewarded their executives and directors with millions in compensation, remuneration, or bonuses, only to have to be rescued by government authorities in the end. This and other comparable circumstances have eroded the morale of Egyptian society, particularly because the Egyptian government funded some companies that had been perpetrating abuses while the populace was forced to make sacrifices in order to overcome the crisis. As a result, there has been a growing focus on the administration of director compensation in recent years.
Considering these circumstances, national-level recommendations have centered on enhancing the transparency of information regarding compensation practices, particularly regarding the comprehensive remuneration policy and individual compensation received by Board of Directors members.
The significance of this research stems from the fact that while numerous studies investigate the correlation between directors' compensation and "board independence" and firm performance, comparatively few scrutinize the association between board compensation disclosure and the level of directors' compensation.
Within this framework, this article presents an empirical examination of the relationship between board remuneration transparency and voluntary disclosure and the level of directors' compensation in Egypt. The objective is to ascertain whether firms with greater transparency of directors' compensation have lower directors' compensation ("transparency control effect" and "transparency deterrent effect") or higher directors' compensation ("effects of transparency on increasing competition in pay").  To accomplish this, a singular panel of data comprising publicly traded Egyptian companies from 2013 to 2018 has been compiled.