The effects of firm size and firm performance on CEO pay in Canada: A Re‐Examination and Extension

2019 ◽  
Vol 37 (3) ◽  
pp. 225-242
Author(s):  
Caroline Yang ◽  
Parbudyal Singh ◽  
Jing Wang
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
Ceo Pay

scholarly journals The Relationships Among Managerial Discretion, Firm Performance, And Chief Executive Officer Compensation: A Simultaneous Equations System Approach

2021 ◽  
Vol 24 (1) ◽  
pp. 114-140
Author(s):  
Juehui Shi ◽  
Winston T. Lin ◽  
Ngoc Cindy Pham
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
Poor Performance ◽  
Chief Executive ◽  
Managerial Discretion ◽  
Simultaneous Equations ◽  
Strategic Choices ◽  
Ceo Pay ◽  
Low Pay ◽  
Simultaneous Equations System

Prior executive compensation studies overlooked the endogeneity of firm performance and the simultaneity of managerial discretion, firm performance, and CEO pay. To overcome these two shortcomings, we propose a novel simultaneous equations system model to investigate the cause-and-effect relationships among research & development (R&D), advertising, firm performance, and CEO compensation, which are jointly affected by CEO’s tenure, age, ownership, firm size, risk, and industry. Although the feedback loops are positive between firm performance and CEO pay and between advertising and firm performance, the feedback loop is negative between R&D and firm performance. Firm size has a direct and indirect effect on R&D, advertising, firm performance, and CEO pay. Large firm size may entice CEOs to invest excessively in R&D, leading to poor performance and low pay. Our study implies that the positive relationship between firm performance and CEO pay depends upon the appropriateness of the strategic choices that CEOs make.

Does Diversity in The Boardroom Add Value to a Firm?

2018 ◽  
Vol 18 (5) ◽  
Keyword(s):  
Firm Performance ◽  
Panel Data ◽  
Firm Size ◽  
Significant Influence ◽  
Negative Influence ◽  
Positive Influence ◽  
Future Research ◽  
Board Composition ◽  
Board Diversity

This study examines whether board diversity affects firm performance. We investigate this study using panel data of a sample of S&P 500 firms during a 12 year period. After controlling for industry, firm size, and other board composition variables, we find that all three board diversity variables of interest – gender, ethnicity, and age have a significant influence on firm performance. While ethnicity and age have a positive influence on firm performance, it was found that gender has a negative influence. Implications for future research are discussed.

Corporate governance and firm performance: empirical evidence from Pakistan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Farooq ◽  
Amna Noor ◽  
Shoukat Ali
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Size ◽  
Good Governance ◽  
Positive Impact ◽  
Least Square ◽  
Local Context ◽  
Content Type ◽  
Governance Index ◽  
Governance Quality

Purpose The purpose of this research is to look into the governance–performance relationship in the context of critical firm characteristics, such as firm size. Design/methodology/approach Based on total assets, sample firms were classified as small or large. The governance index, which is based on 29 governance provisions covering the audit committee, board committee, ownership and compensation structure of the respective firm, measures governance quality among sample firms. A higher governance index indicates a higher level of governance quality and vice versa. Accounting and market value measures are used to determine firm profitability. The authors used the two-stage least square (2SLS) method of estimation of the model to eliminate the simultaneous equation bias. Findings Corporate governance (CG) appears to have a positive impact on accounting return and market indices (Tobin’s Q), but it has little impact on return on equity. In terms of firm size, larger companies profited more from better governance implementation than smaller firms that lacked these principles, thus improving CG. The findings indicate that small businesses should improve their governance mechanisms to reap the benefits of CG in terms of increased profitability. Research limitations/implications There are certain drawbacks to this research. First, the authors omitted qualitative aspects of CG from the CG index, such as the board’s decision-making process, directors’ perceptions of the board’s position and directors’ age and qualifications. Such a qualitative component will improve the governance index in the future while building the governance index. Second, as the current study only looks at the nonfinancial sector, caution should be exercised before applying the findings to the entire population. Practical implications The findings show that companies that follow good governance standards have better accounting and market efficiency than those that do not. As a result, good governance practices can help firms in developing countries improve their performance. Academic researchers, regulators, investors, lenders and practitioners can find the findings useful in establishing a true relationship between firm performance and CG practices in Pakistan. Originality/value The relationship between governance and profitability in the context of firm size is examined in this research. Firms with varying resources and ability to implement CG codes have varying effects on profitability. To the authors’ knowledge, there was a gap in the literature that addressed this topic in the local context.

scholarly journals Impact of Firm Performance on Corporate Governance Quality: The Case of Nigerian Manufacturing Firms

2020 ◽  
pp. 189-193
Author(s):  
R. A. Akinsokeji ◽  
E. O. Ogunleye ◽  
O. O. Akindele
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
High Performance ◽  
Manufacturing Firms ◽  
Board Structure ◽  
Panel Data Estimation ◽  
Pooled Data ◽  
Two Measures ◽  
Corporate Governance Quality ◽  
Data Estimation

In this study, the reverse impact of firm corporate performance on board structure is empirically examined using a large cross section of 50 manufacturing firms in Nigeria. The study makes a divergence from previous studies by noting that such a reverse effect is possible and examining this effect of performance on board structure in Nigeria. The panel data estimation technique is employed on the pooled data for the firms over a ten-year period (2004-2013) and estimation is performed using four measures of firm performance and two measures of board structure. The results show that there is actually reverse impact of firm performance on board structure although the effect is quite weak. The only performance variable that exerts significant impact on board structure (board size and independence) is earnings per share and, to a lesser degree profit margin. Moreover, firm size is shown to be an essential factor in explaining the general behavior of firm performance and also the pattern of effect of such performance on the board structure. The analyses clearly showed that firm size is itself a strong positive factor in improving firm performance and also tends to improve the effect of high performance on board structure across the firms.

scholarly journals The Effect of Workforce Birthplace Diversity on Firms: When do Migrants increase Firms’ Performance?

2021 ◽  
Author(s):  
Roberta Misuraca ◽  
Maria Carmela Annosi ◽  
Maria Rosaria Carillo ◽  
Wilfred Dolfsma
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
Positive Impact ◽  
Agriculture Sector ◽  
Business Dynamics ◽  
The Impact

Abstract Growing migration between countries and the sustained trend of globalization are changing business dynamics and creating conditions for increased workforce birthplace diversity within firms. However, few studies investigate the relationships between workforce birthplace diversity and firm performance. We address this, and also study how the impact of workplace birthplace diversity on firm performance is moderated by characteristics of the firms (firm size). We find that firm performance increases when workforce birthplace diversity increases. While larger firms perform better, smaller firms can make better use of birthplace diversity’s positive impact on firm performance. We analyzed a panel of 33,258 Italian firms operating in the agriculture sector between 2012 and 2017. Theoretical implications of our results are discussed, and further research is recommended to investigate appropriate internal mechanisms to enable firms to take advantage of workforce birthplace diversity.JEL: F22, J15, J61, Z1

scholarly journals CEO Compensation and Firm Performance: The Role of ESG Transparency

2020 ◽  
Vol 4 (2) ◽  
pp. 278
Author(s):  
Chetna Rath ◽  
Florentina Kurniasari ◽  
Malabika Deo
Keyword(s):  
Firm Performance ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Negative Relationship ◽  
Chief Executive ◽  
Long Run ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

Chief executive officers (CEOs) of environmental, social, and governance (ESG) firms are known to take lesser pay and engage themselves in corporate social responsibility activities to achieve the dual objective of the enhancement of firm’s performance as well as benefit for stakeholders in the long run. This study examines the role of ESG transparency in strengthening the impact of firm performance on total CEO pay in ESG firms. A panel of 67 firms for the period of 2014–2019 has been analyzed using the two-step system GMM model, with NSE Nifty 100 ESG Index as the data sample and ESG scores from Bloomberg database as a proxy for transparency. Findings reveal that environmental and governance disclosure scores have the potential to intensify the negative relationship between firm performance and CEO compensation, while social disclosure scores do not. In addition, various firm-specific, board-specific, and CEO-specific attributes have also been considered controls affecting remuneration. This paper contributes to the literature by exploring the effect of exhibiting ESG transparency and its nexus with CEO pay as well as firm performance.

Pay-performance sensitivity and corporate governance mechanisms: evidence from Tunisia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Meriem Ghrab ◽  
Marjène Gana ◽  
Mejda Dakhlaoui
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Pay For Performance ◽  
Simultaneous Equation ◽  
Executive Pay ◽  
Estimation Model ◽  
Content Type ◽  
Explanatory Variables ◽  
Performance Sensitivity ◽  
Ceo Pay

Purpose The purpose of this study is to analyze the CEO compensation sensitivity to firm performance, termed as the pay-for-performance sensitivity (PPS) in the Tunisian context and to test the robustness of this relationship when corporate governance (CG) mechanisms are considered. Design/methodology/approach The consideration of past executive pay as one of the explanatory variables makes this estimation model a dynamic one. Furthermore, to avoid the problem of endogeneity, this study uses the system-GMM estimator developed by Blundell and Bond (1998). For robustness check, this study aims to use a simultaneous equation approach (three-stage least squares [3SLS]) to estimate the link between performance and CEO pay with a set of CG mechanisms to control for possible simultaneous interdependencies. Findings Using a sample of 336 firm-years from Tunisia over the 2009–2015 periods, this study finds strong evidence that the pay-performance relationship is insignificant and negative, and it becomes more negative or remains insignificant after introducing CG mechanisms consistently with the managerial power approach. The findings are robust to the use of alternative performance measures. This study provides new empirical evidence that CEOs of Tunisian firms abuse extracting rents independently of firm performance. Originality/value This study contributes to the unexamined research on PPS in a frontier market. This study also shows the ineffectiveness of the Tunisian CG structure and thus recommends for the legislator to impose a mandatory CG guide.

Firm Size, Pay Gap and Firm Performance

2013 ◽  
Vol 8 (5) ◽  
pp. 38-45
Author(s):  
Chunyan Chen ◽  
Huobao Xie
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
Pay Gap
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