GLOBAL - Governance at financial firms has not been significantly worse than at other companies, and the executive directors of banks were not over-paid, according to the first empirical study of pay and governance since the financial crisis.

Writing in Investment Risk and Governance, to be published by SimCorp Strategy Lab, Prof Renée Adams of UQ Business School at the University of Queensland, concludes that although CEOs of financial companies earn more than their counterparts in the non-financial world, they were not over-compensated on a market cap-adjusted basis.

Prof Adams analysed 18,542 data points, corresponding to directors at all directors at S&P500, S&PMidCaps and S&PSmallCaps firms from 1996-2007. Financial firms accounted for 14.57% of the total number of observations.

"Ex post, it is easy to argue that governance problems occurred, but ex ante it is not clear that boards of of financial firms were doing anything much different from boards in other firms," Prof Adams writes in her chapter of the book, Governance and the Financial Crisis.

She also notes that banks receiving bailout money had boards that were independent, and had directors that were significantly less well remunerated than their counterparts at other companies. "What this suggests is that board independence may not necessarily be beneficial for banks. Independent directors may not always have the expertise necessary to oversee complex banking firms."

Commenting on the findings, Prof Steen Thomsen, director of the Centre for Corporate Governance at Copenhagen Business School, and editor of SimCorp StrategyLab's book, said: "Independence was a good predictor of failure, so some of the things we thought we knew about corporate governance turn out to be wrong."

He added: "The standard story of an outbreak of greed was not the case in the financial industry."