The impact of board governance on director compensation in West African IPO firms

This paper undertakes a unique study of the determinants of corporate governance in the West African developing region and their impact on director compensation. A new measure of director total remuneration is constructed providing a conservative estimate of expropriation of private benefits of control. Using a hand-collected sample of 51 West African IPO firms from 2000 to 2011 we find evidence that increased presence of true independent nonexecutives that are unconnected to CEO or dominant insider groups within firm and nominally independent board level committees are highly associated with expropriation inferring that firm's with directors engaging in this behaviour are more likely to adopt measures indicative of governance best practice.

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► Unique sample of 51 Initial Primary Offering (IPO) firms from across West African region.
► Evidence does not support convergence of corporate governance systems with Anglo-American shareholder value system.
► Evidence infers IPO firms with more independent nonexecutives are more likely to have directors engaging in greater self-reward.
► Evidence suggests that genuine independence is unlikely in developing countries with very narrow political economies dominated by social elites.