Motives for granting additional remuneration to majority managers, by Tunisian limited liability companies, alongside their share in profits

Abstract

Purpose

The purpose of this study is to investigate the motives for granting additional remuneration to majority managers in Tunisian limited liability companies. The theoretical explanation is based on the tax avoidance hypothesis on the one hand and on the conflict of interests hypothesis on the other hand.

Design/methodology/approach

The sample used consists of 48 Tunisian limited liability companies throughout the period ranging from 2015 to 2020. The authors use the panel data with the generalized method of moments (GMM) estimate in first difference.

Findings

The results provide evidence of a positive relationship between the accounting performance of the company and the granting of additional remuneration to majority managers, alongside their share in profits. What is more, there is a positive relationship between the change in the company's accounting results and the granting of additional remuneration to majority managers, alongside their share in profits. Likewise, the tax avoidance carried out by the firm is positively and significantly correlated with the granting of additional remuneration to majority managers, alongside their share in profits.

Practical implications

The results may help corporations consider their future growth opportunities. This is in a context where the approach to tax avoidance and conflict of interests occupies a central place in the assessment of the granting of additional remuneration to majority managers, alongside their share in profits.

Originality/value

This article is motivated by the low number of works in the context of granting additional remuneration to majority managers, alongside their share in profits. It makes a substantial contribution to the academic literature through adding to the limited body of research on tax avoidance and conflict of interests in a corporate context.

Citation

Abdelmoula, L. (2022), "Motives for granting additional remuneration to majority managers, by Tunisian limited liability companies, alongside their share in profits", EuroMed Journal of Business, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/EMJB-03-2022-0060