Ownership structure and CEO remuneration: do independent directors matter?

PurposeThis study aims to investigate the influence of ownership structure on chief executive officer (CEO) remuneration in an empirical manner. This paper also targets to explore the moderating effect of independent directors.Design/methodology/approachThis research uses a sample of 67 non-financial firms listed on the Amman Stock Exchange between 2015 and 2020. The analysis uses the ordinary least squares regression method. Furthermore, it incorporates the two-stage least squares method and the generalised method of moments technique to address endogeneity issues. Similarly, a dynamic model is applied to tackle causality-related concerns in the study's equations. Consequently, the study conducts thorough data analyses, ensuring robust findings.FindingsThe outcomes show that ownership structure has an influence on CEO remuneration. Moreover, the results indicate that independent directors moderate the association between ownership structure and CEO remuneration. These findings enhance and support the agency theory in the Jordanian context.Practical implicationsThe study's findings may help investors, regulators and scholars comprehend the practices of CEO remuneration in Jordan.Originality/valueThis investigation provides a unique understanding by explaining the impact of ownership structure on CEO remuneration, in addition to the role of independent directors in a developing nation like Jordan. Besides that, the current paper extends past studies in Jordan significantly.