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This study develops and externally validates the Executive Remuneration Quality Index (QRAA), a multidimensional measure designed to assess the quality of executive remuneration structures as a strategic governance mechanism in Brazilian listed firms. The index integrates incentive design, governance oversight, ownership structure, sustainability attributes, and disclosure-based information into a transparent composite framework. Using publicly disclosed data from 228 firms listed on Brazil’s Stock Exchange (B3), complemented by structured input from 37 institutional investors, the study documents substantial heterogeneity in remuneration quality across firms. The revised empirical strategy emphasizes external validation rather than causal inference by examining whether QRAA is associated with firm-level outcomes that are not part of the index construction, including ROA, Enterprise Value, and the Sharpe Ratio. The findings indicate that higher QRAA scores are positively associated with operating performance, market valuation, and risk-adjusted performance. Grounded in Agency Theory, the study conceptualizes executive remuneration quality as a multidimensional governance construct shaped by incentive alignment, monitoring mechanisms, and transparency. By combining index development with external empirical validation, the QRAA provides a replicable benchmarking tool for boards, investors, and regulators in ownership-concentrated market contexts.
Teixeira et al. (Mon,) studied this question.