Top Management Incentives and the Pricing of Corporate Public Debt

2006 ◽  
Vol 41 (2) ◽  
pp. 317-340 ◽  
Author(s):  
Hernan Ortiz-Molina

AbstractThis article examines managerial ownership structure and at-issue yield spreads on corporate bonds. There is a positive relation between managerial ownership and borrowing costs, and this relation is weaker at higher levels of ownership. In addition, managerial stock options have a larger effect on yield spreads than stock ownership. These effects exist after controlling for firm and bond characteristics, and are robust to endogeneity and sample selection concerns. The evidence suggests that rational bondholders price new debt issues using the information about a firm's future risk choices contained in managerial incentive structures, and that lenders anticipate higher risk-taking incentives from managerial stock options than from equity ownership.

2019 ◽  
Vol 1 (1) ◽  
pp. 20-29
Author(s):  
Dovi Septiari ◽  
Wirdani Atika Sari

Accounting conservatism is the precautionary principle to the profit recognition and one of the corporate governance to reduce the ability of the manager in manipulate and exaggerating the financial statements. Corporate governance is a internal control system which has its business objectives through securing company’s assets. This research is aiming to see the correlation among auditor independence and good corporate governance in accounting conservatism. Characteristics of good corporate governance in this are managerial ownership, profitability, company size and leverage. This research uses two measurements of conservatism non operating accrual and market to book ratio. This research as carried out at manufacture company in the Indonesia Stock Exchange in 2010-2014. Sample selection do by purposive sampling method and obtained 49 companies in criteria accordingly. This research used data analysis and multiple liniear regression program eviews 9. The result showed that the effect of auditor independence is not significant in accounting conservatism in indonesia. Good corporate governance influential only the size of the company and ownership. The measurement of non operating accrual and market to book ratio show different results. Further research is expected to use another proxy for other variables to measure accounting conservatism.


2020 ◽  
Vol 8 (1) ◽  
pp. 19-30
Author(s):  
Fauziyah Nafishah

Fauziyah Nafishah; This study aims to determine the effect of managerial ownership, and leverage on stock returns in retail companies in Indonesia.The research method used in this study is a quantitative method, the independent variable used in this study consists of managerial ownership structure and leverage while the dependent variable is stock returns. The population in this study are retail companies listed on the Indonesia Stock Exchange (IDX) listed on the Indonesia Stock Exchange 2013-2017 period. Sample selection through purposive sampling method. There are 7 (seven) companies that have criteria as research samples, so that the research data totaled 35 data. Data collection techniques used are document review, the data analyzed are annual financial reports (annual report), previous research journals and other literature relating to research problems. Data processing and analysis techniques include financial management analysis, multiple linear regression analysis, classic assumption test, hypothesis test, coefficient of determination test and coefficient of determination test. The results showed that managerial ownership partially influential and significant on stock returns, and partial leverage had no significant and significant effect on stock returns. While simultaneously managerial ownership, and leverage affect stock returns.Therefore, it is better for the company's internal parties to improve the company's performance because the company's performance and good company production will make investors interested in investing in these companies. Keyword : managerial ownership, leverage, stock returns


ACCRUALS ◽  
2020 ◽  
Vol 4 (01) ◽  
pp. 104-119
Author(s):  
Ardela Soehartinah Gunawan ◽  
Icih Icih ◽  
Trisandi Eka Putri

This study aims to determine the effect of firm size, leverage, managerial ownership, listing age and audit committee on earnings persistence. The data used is data on banking companies listed on the Indonesia Stock Exchange (IDX) period 2015-2017. The sample selection uses a purposive sampling method. The samples that fit the criteria were 29 companies during the 2015-2017 observation period, so that the final number of observational data was 87 (3 × 29). Then data were analyzed using the SPSS 22 application.The results of this study indicate that firm size, managerial ownership and listing age do not affect earnings persistence. While leverage and audit committees negatively affect earnings persistence. Variables of company size, leverage, managerial ownership, listing age and audit committee jointly influence the persistence of earnings.


Blood ◽  
2013 ◽  
Vol 122 (21) ◽  
pp. 3930-3930 ◽  
Author(s):  
Christine R Klaus ◽  
Scott R. Daigle ◽  
Dorothy Iwanowics ◽  
L. Danielle Johnston ◽  
Carly A Therkelsen ◽  
...  

Abstract EPZ-5676 is a small molecule inhibitor of the histone methyltransferase DOT1L that is currently under clinical investigation as a potential therapy for acute leukemias bearing MLL-rearrangements. Gene knockout and small molecule inhibitor studies have demonstrated that DOT1L is required for MLL-fusion protein–mediated leukemogenesis in model systems. In preclinical studies EPZ-5676 promoted cell killing of acute leukemia lines bearing MLL translocations in vitro while sparing those without MLL gene translocations and also caused sustained tumor regressions in a rat xenograft model of MLL-rearranged leukemia [Daigle et al. Blood 2013]. To support potential future clinical scenarios, we evaluated the activity of EPZ-5676 in combination with current standard of care agents for acute leukemias as well as other chromatin modifying drugs in cell proliferation assays with three human acute leukemia cell lines; Molm-13 (MLL-AF9 expressing acute myeloid leukemia (AML)), MV4-11 (MLL-AF4 expressing acute biphenotypic leukemia cell line) and SKM-1 (non-MLL-rearranged AML). We established a high density combination platform suitable for testing the anti-proliferative activity of a complete titration matrix of two agents with multiple replicate points to enable generation of statistically meaningful results. This platform was used to evaluate the anti-proliferative effects of EPZ-5676 combinations tested in a co-treatment model in which the second agent was added along with EPZ-5676 at the beginning of the assay, or in a pre-treatment model in which cells were incubated for several days in the presence of EPZ-5676 prior to the addition of the second agent. The drug combination analysis was performed using the Chou-Talalay method [Chou TC Pharmacological Reviews 2006]. Graphs representing values of combination index (CI) versus Fractional effect (Fa) known as Fa-CI plots were generated and synergy was evaluated. Drug synergy was statistically defined by CI values less than 1, antagonism by CI >1 and additive effect by CI equal to 1. We found that EPZ-5676 acts synergistically with the AML standard of care agents cytarabine or daunorubicin in Molm-13 and MV4-11 MLL-rearranged cell lines. However, in the non-rearranged SKM-1 cell line EPZ-5676 had no effect alone and did not act synergistically with cytarabine or daunorubicin. Moreover, a persistent combination benefit was observed even when EPZ-5676 was washed out prior to the addition of the standard of care agents (Figure 1), suggesting that EPZ-5676 sets up a durable altered chromatin state that enhances the effect of chemotherapeutic agents in MLL-rearranged cells. We are currently exploring the mechanism of action of this synergy in more detail.Figure 1. Fa-CI plots show that EPZ-5676 and cytarabine act synergistically to induce an antiproliferative effect in the Molm-13 cell line in a pre-treatment model. (A) Ten-day continuous dosing of EPZ-5676 with addition of cytarabine at day 7 showed a range of fractional effects with CI values <1 denoting synergy. (B) EPZ-5676 was removed at day 7 prior to the addition of cytarabine showing durable combination benefit.Figure 1. Fa-CI plots show that EPZ-5676 and cytarabine act synergistically to induce an antiproliferative effect in the Molm-13 cell line in a pre-treatment model. (A) Ten-day continuous dosing of EPZ-5676 with addition of cytarabine at day 7 showed a range of fractional effects with CI values <1 denoting synergy. (B) EPZ-5676 was removed at day 7 prior to the addition of cytarabine showing durable combination benefit. Our evaluation of EPZ-5676 in conjunction with other chromatin modifying drugs also revealed a consistent combination benefit including synergy with DNA hypomethylating agents. In summary, our results indicate that EPZ-5676 is highly efficacious as a single agent and is synergistic with other anticancer agents including AML standard of care drugs and DNA hypomethylating agents in MLL-rearranged cells. Disclosures: Klaus: Epizyme, Inc.: Employment, Equity Ownership, Patents & Royalties, Stock Options Other. Daigle:Epizyme, Inc.: Employment, Equity Ownership, Patents & Royalties, Stock Options Other. Iwanowics:Epizyme, Inc.: Employment, Equity Ownership, Stock Options Other. Johnston:Epizyme, Inc: Employment, Equity Ownership, Stock Options Other. Therkelsen:Epizyme, Inc.: Employment, Equity Ownership, Stock Options Other. Smith:Epizyme, Inc.: Employment, Equity Ownership, Stock Options Other. Moyer:Epizyme, Inc.: Employment, Equity Ownership, Stock Options Other. Copeland:Epizyme Inc. : Employment, Equity Ownership, Membership on an entity’s Board of Directors or advisory committees, Patents & Royalties; Mersana: Membership on an entity’s Board of Directors or advisory committees. Olhava:Epizyme, Inc: Employment, Equity Ownership, Patents & Royalties, Stock Options Other. Porter Scott:Epizyme, Inc: Employment, Equity Ownership, Patents & Royalties, Stock Options Other. Pollock:Epizyme Inc.: Employment, Equity Ownership, Patents & Royalties, Stock Options Other. Raimondi:Epizyme, Inc: Employment, Equity Ownership, Patents & Royalties, Stock Options Other.


2017 ◽  
Vol 20 (02) ◽  
pp. 1750012 ◽  
Author(s):  
Steven Hegemann ◽  
Iuliana Ismailescu

This study examines management’s response to the change in accounting for stock option-based compensation imposed by SFAS No. 123R, whose implementation is expected to reduce reported income. To cope with this impact, management may be motivated to decrease the use of stock options as part of compensating employees and engage in stock repurchases in an attempt to increase the value of outstanding employee stock options. Our findings demonstrate a significant negative relation between stock options granted and shares repurchased in the aftermath of SFAS No. 123R, particularly for the S&P 500 firms known for their heavy use of employee stock options. Furthermore, evidence of a contemporaneous increase in repurchases and leverage in the post SFAS 123R period may suggest that some of the buybacks may have been funded with debt. Our findings are robust to the inclusion of traditional determinants of share repurchases.


2017 ◽  
Vol 16 (2) ◽  
pp. 239-259 ◽  
Author(s):  
Santanu Mitra ◽  
Bikki Jaggi ◽  
Talal Al-Hayale

Purpose The purpose of the study is to examine the effect of managerial stock ownership on the relationship between material internal control weaknesses (ICW) and audit fees. Design/methodology/approach The paper uses multivariate regression analyses on a sample of 1,578 ICW and 1,578 pair-matched (based on both propensity score and managerial stock ownership) non-ICW firm observations for a period from 2004 to 2010 to investigate how managerial incentive at various stock ownership levels impacts the relationship between material ICW and audit fees. Findings For the firms with low managerial stock ownership (up to 5 per cent stockholdings), the authors find no significant effect of managerial ownership on the positive relationship between audit fees and ICW. However, the impact of managerial stock ownership on the relationship between ICW and audit fees is significantly positive when managerial ownership is medium, i.e. more than 5 per cent and less than or equal to 25 per cent stockholdings, and the managerial ownership effect is even higher when managerial stock ownership is high, i.e. more than 25 per cent stockholdings. The result is especially robust for the ICW firms with high managerial stock ownership (i.e. where managers hold more than 25 per cent equity stake in the firms). The additional analyses further show that this managerial ownership effect is more pronounced when the firms suffer from company-level material control weaknesses that have pervasive negative effect on financial reporting quality. Research limitations/implications The results imply that in a low managerial ownership firms with substantial misalignment between manager and shareholder incentives, managerial stock ownership has little effect on the ICW and audit fee relationship. But when managers’ ownership interest is at a high level, they are more prone to purchase higher-quality audit service to reduce the risk of financial misstatements due to material ICW, which results in higher audit fees. The results add to the audit fee literature by suggesting that managerial incentive at various ownership levels is a critical governance factor that impacts auditor’s fee structure especially when higher reporting risk exists due to material ICW. Originality/value Prior literature documents that there is some relationship between managerial attributes and earnings quality; however, there is no substantive empirical evidence on the effect of managerial stock ownership on audit pricing when client companies face higher risk of financial misreporting as a result of material ICW. In this study, the authors seek answers to these empirical questions and fill the gap in the literature.


2019 ◽  
Vol 3 (2) ◽  
pp. 79-101
Author(s):  
Faisal Suroto ◽  
Iwan Setiadi

This study aims to determine the effect of Good Corporate Governance on profitability and company size. Good corporate governance in this study is proxied by independent board of commissioners, managerial ownership, institutional ownership, audit quality and Firm Size. Company profitability is measured by Return on Equity (ROE). This type of research is quantitative with a descriptive approach. The population in this study is the LQ45 non-financial company listed on the Indonesia Stock Exchange in 2013-2017. The sample selection technique is using purposive sampling. The type of data used is student data. The data analysis technique in this study used multiple linear regression analysis. The results of this study indicate that simultaneous independent commissioner variables, managerial ownership, institutional ownership, audit quality and firm size have a significant effect on profitability. partially independent board of commissioner variables have a significant negative effect on priofitability. Managerial ownership does not have a significant effect on profitability. Institutional ownership has a significant positive effect on profitability. Audit quality does not have a significant effect on profitability, Firm size does not have a significant effect on profitability.


2021 ◽  
Vol 18 (1) ◽  
pp. 27-51
Author(s):  
Lamoza Ressidnarry Lamoza Ressidnarry ◽  
Julianti Sjarief

Fraudulent financial reporting often occurs in company management. Management who has a cooperation contract with the principal, there are often differences in interests between management and shareholders. The difference in interests makes it possible for management to commit fraud. Therefore, the factors that cause fraudulent financial reporting need to be known. This study aims to examine the effect of bankruptcy, auditors specializing in industry and corporate governance (consisting of managerial ownership, number of audit committee meetings and composition of independent commissioners). The population of this research is manufacturing companies in the consumer goods industry which are listed on the Indonesia Stock Exchange 2015-2018. Based on the purposive sampling method in the sample selection process, 38 companies were obtained as samples. Hypothesis testing is carried out by logistic regression analysis using the SPSS version 21 program. The results of this study are bankruptcy, managerial ownership and the composition of independent commissioners have an effect on fraudulent financial reporting. Meanwhile, auditors specializing in industry and the number of audit committee meetings have no effect on fraudulent financial reporting.


Blood ◽  
2013 ◽  
Vol 122 (21) ◽  
pp. 652-652 ◽  
Author(s):  
Michael W. Deininger ◽  
Neil P. Shah ◽  
Jorge E. Cortes ◽  
Dong-Wook Kim ◽  
Franck E. Nicolini ◽  
...  

Abstract Background In CML, the presence of BCR-ABL kinase domain (KD) mutations, including low-level mutations, can predict clinical responses to 2nd line BCR-ABL tyrosine kinase inhibitors (TKIs). In addition, sequential treatment with TKIs can lead to development of compound mutations (≥2 mutations in the same BCR-ABL allele) that can be highly TKI-resistant. Ponatinib is a potent BCR-ABL TKI that, preclinically, has demonstrated activity against all BCR-ABL mutations tested and suppresses the emergence of any single mutation at clinically achievable concentrations (40 nM with ≥30 mg/d). In vitro, higher ponatinib concentrations were required to suppress emergence of certain compound mutations on a background of T315I or E255V single mutations. We evaluated the impact of single, low-level, and compound mutations at BL on responses to ponatinib and EOT mutations in CP-CML pts in the phase 2 PACE trial. Methods Pts with CP-CML (93% received ≥2 prior TKIs, 60% ≥3) resistant or intolerant to dasatinib and/or nilotinib (N=203) or with T315I confirmed at BL (N=64) were enrolled. The primary endpt was major cytogenetic response (MCyR) by 12 mos. Median follow-up at analysis (1 Apr 2013) was 20 (0.1-28) mos, with a minimum follow-up of 18 mos for pts remaining on study. Next generation sequencing (NGS) and Sanger sequencing (SS) were done at a central laboratory. NGS was conducted on all BL samples (N=267) with the Ion Torrent PGM using chemistry that enabled read lengths up to 400 bp for detection of compound mutations; mutations observed at a frequency ≥1% are reported. SS was conducted on both BL and EOT samples. Results By NGS at BL, 267 mutations (amino acid substitutions in the ABL KD [M237-E507]) were detected among 163 (61%) pts; 106 (40%) mutations were low level mutations not detected by SS. 75 unique single mutations were observed: 27 were detected by SS and NGS, all 27 have been associated with resistance to TKIs other than ponatinib; 48 were low level mutations detected only by NGS, 5 have been associated with resistance to TKIs other than ponatinib. 12% of pts had only low level mutations. Overall, no mutations were detected in 39% of pts, 1 mutation in 37%, and ≥2 mutations in 24%. Compound mutations were detected in 65% of pts who had ≥2 mutations, representing 15% of pts overall (10% with 1, 5% with 2 to 4 compound mutations). 48 unique compound mutations were observed; T315I, F317L, and F359C/I/V were the most commonly observed mutations within compound mutations. Responses were seen in pts with each of the 20 unique single mutations present in >1 pt at BL by NGS, including Y253H, E255V/K, T315I, M351T, F359V. Responses were observed regardless of overall NGS BL mutation status (table). The high response rates and durability of response in pts with compound mutations suggest that, in general, the presence of compound mutations at BL did not adversely affect the activity of ponatinib. Of the 109 pts who discontinued, 84 had successful mutation assessments by SS at or near the EOT visit. 4 pts had mutations at EOT that were not detected by NGS at BL; all 4 involved compound mutations (T315I/F359V [100%/90%], T315I/M351T [100%/40%], Y253H/F359V [100%/100%; n=2]), with one or both of the involved mutations detected individually at BL or by history. Overall, 12 pts lost MCyR (none with T315I at BL); 6 of the 12 discontinued and had EOT mutations assessed, no changes from BL were observed. Conclusions Responses to ponatinib were observed regardless of BL mutation status. Interestingly, responses tended to be lower in pts without mutations, suggesting that BCR-ABL independent mechanisms may be involved. No single mutation conferring resistance to ponatinib in CP-CML has been observed to date. In general, ponatinib activity was not adversely affected by the presence of compound mutations at BL. Rarely, the development of compound mutations was observed at EOT in pts with one of the involved mutations at BL or by history. Early introduction of ponatinib may suppress the emergence of single BCR-ABL mutations, and, as a result, the development of compound mutations. NCT01207440 Disclosures: Deininger: BMS, ARIAD, NOVARTIS: Consultancy; BMS, NOVARTIS, CELGENE, GILEAD: Research Funding; ARIAD, NOVARTIS: Advisory Boards, Advisory Boards Other. Shah:Ariad, Bristol-Myers Squibb: Consultancy, Research Funding. Cortes:Ariad, Pfizer, Teva: Consultancy; Ariad, BMS, Novartis, Pfizer, Teva: Research Funding. Kim:BMS, Novartis, IL-Yang: Consultancy; BMS, Novartis, Pfizer, ARIAD, IL-Yang: Research Funding; BMS, Novartis, Pfizer, IL-Yang: Honoraria; BMS, Novartis, Pfizer: Speakers Bureau; BMS, Pfizer: Membership on an entity’s Board of Directors or advisory committees. Nicolini:Novartis, ARIAD, Teva: Consultancy; Novartis, BMS: Research Funding; Novartis, BMS, Teva, Pfizer, ARIAD: Honoraria; Novartis, BMS, TEva: Speakers Bureau; Novartis, ARIAD, Teva, Pfizer: Membership on an entity’s Board of Directors or advisory committees. Talpaz:Ariad, BMS, Sanofi, INCYTE: Research Funding; Ariad, Novartis: Speakers Bureau; Ariad, Sanofi, Novartis: Membership on an entity’s Board of Directors or advisory committees. Baccarani:ARIAD, Novartis, BMS: Consultancy; ARIAD, Novartis, BMS, Pfizer, Teva: Honoraria; ARIAD, Novartis, BMS, Pfizer, Teva: Speakers Bureau. Muller:Novartis, BMS, ARIAD: Consultancy; Novartis, BMS: Research Funding; Novartis, BMS, ARIAD: Honoraria. Lustgarten:ARIAD: employees of and own stock/stock options in ARIAD Pharmaceuticals, Inc Other, Employment. Clackson:ARIAD: employees of and own stock/stock options in ARIAD Pharmaceuticals, Inc Other, Employment. Turner:ARIAD: Employment. Haluska:ARIAD: employees of and own stock/stock options in ARIAD Pharmaceuticals, Inc Other, Employment. Hodgson:ARIAD: Employment, Equity Ownership. Rivera:ARIAD: Employment, Equity Ownership. Goldman:ARIAD: Honoraria. Kantarjian:ARIAD, Novartis, BMS, Phizer: Research Funding. Soverini:Novartis, BMS, ARIAD: Consultancy. Hochhaus:Ariad, Novartis, BMS, MSD, Pfizer: Research Funding; Novartis, BMS, Pfizer: Honoraria. Hughes:Novartis, BMS, ARIAD: Honoraria, Research Funding. Branford:Novartis, BMS, ARIAD: Research Funding; Novartis, BMS, ARIAD: Honoraria.


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