Examining Causality Of Managerial Ability Against Executive Compensation (Case Study on Conventional Banking in Indonesia)

Sri Lestari, Weni Novandari, Devani Laksmi Indyastuti


Executive compensation can be a reducer of agency conflict between managers and shareholders, therefore this study seeks to examine the variables that affect executive compensation, especially the managerial ability variable. This research is causality research. The population is all conventional banks listed on the Indonesia Stock Exchange from 2017 to 2021. The sample was taken using the Purposive Sampling technique and found 32 banks that match the specified characteristics. Panel Data Regression was used to analyze the data using the Eviews 9 program. Managerial ability has been shown to have a positive effect on executive compensation in banking in Indonesia during the study period. Managers who have higher abilities will make the company perform well, therefore managers who have higher abilities should be given greater compensation.

Keywords: Managerial Ability, Executive Compensation, Conventional Banking.

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