Leverage and employee compensation – the perspective of human capital

2019 ◽  
Vol 15 (1) ◽  
pp. 62-78 ◽  
Author(s):  
Hsuan-Chu Lin ◽  
Shao-Huai Liang ◽  
She-Chih Chiu ◽  
Chieh-Yuan Chen
Keyword(s):  
Human Capital ◽  
Financial Distress ◽  
Chief Executive ◽  
Ordinary Least Squares ◽  
Future Research ◽  
Least Squares Regression ◽  
Labor Costs ◽  
Employee Compensation ◽  
Content Type ◽  
Distressed Firms

Purpose The purpose of this paper is to empirically test the predictions in Titman (1984) and Berk et al. (2010) which indicate that firms with higher leverage will pay chief executive officer (CEO) and employee more. In addition, this paper examines whether financial distressed firms utilize leverage as a bargaining tool to reduce labor costs. Design/methodology/approach This paper conducts ordinary least squares regression analysis to investigate: CEO compensation which represents critical employees and lower-level employee compensation which represents less critical employees. Empirical data consist of US publicly held companies during the period between 2006 and 2013. Findings This paper finds that firms with higher levels of leverage tend to compensate employees for their human capital risk and that financially distressed firms consider leverage a bargaining tool by which to depress labor costs, which leads to lower employee compensation as compared to that of financially healthy firms. Research limitations/implications This paper highlights the importance of keeping balance between human capital and labor costs. In the case that human capital risk might not be fully compensated by firms facing financial distress, vicious cycle could occur because a failure of considering human capital might invite unrecoverable consequence. This could be done in future research. Originality/value This paper has three contributions. First, this paper supports the Titman (1984) and Berk et al. (2010) by empirically documenting that high-leveraged firms compensate their employees for potential human capital risk. Second, this paper adds to the literature by empirically providing that human capital risk might not be fully compensated if the firms are facing financial distress. Finally, this paper contributes to the authorities by showing that employees’ interests may be sacrificed if the firm is under financial distress.

Different tenure phases of executives and audit fees

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rachana Kalelkar ◽  
Qiao Xu
Keyword(s):  
Internal Control ◽  
Chief Executive ◽  
Audit Fees ◽  
Ordinary Least Squares ◽  
Chief Financial Officers ◽  
Future Research ◽  
Least Squares Regression ◽  
Audit Pricing ◽  
Content Type ◽  
The Impact

Purpose The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain the effect of executives’ tenure on audit pricing. This paper aims to determine, which viewpoint dominates in explaining the relationship between audit pricing and executive tenure phases. Design/methodology/approach Using a sample of 11,198 firm-year observations from 2007 to 2016, the authors adopt an ordinary least squares regression model to assess the impact of the middle and long phases of executives’ tenure on audit fees. Findings Audit fees are significantly lower when executives enter the middle and long phases of tenure. The reduction in audit fees is greatest as both chief executive officers and chief financial officers enter the long tenure phase. Although audit fees gradually decrease as executive tenure is extended, they start increasing two years before the end of executive tenure. Furthermore, the negative association between the executive tenure phase and audit fees is greater when the executive is appointed externally. Finally, the long phase of executive tenure also mitigates the positive relationship between audit fees and internal control weaknesses. Research limitations/implications This study is based on US data. Future research may extend this study to other countries. Practical implications The findings are important to firms, practitioners and academicians, particularly, as the length of tenure of top executives has increased in recent years. By documenting that executives’ middle and long tenure phases reduce audit fees, the findings highlight the importance of maintaining executives in the firm. Finally, the findings have implications for investors, policymakers and auditors to identify companies with high audit risk. Originality/value This study is the first to document the impact of executives’ middle and long tenure phases on audit fees.

Community policing and the organizational structure of campus law enforcement agencies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sherah L. Basham
Keyword(s):  
Law Enforcement ◽  
Organizational Structure ◽  
Community Policing ◽  
Ordinary Least Squares ◽  
Future Research ◽  
Least Squares Regression ◽  
Law Enforcement Agencies ◽  
Content Type ◽  
Campus Law Enforcement ◽  
Reported Crime

PurposeThe purpose of this paper is to examine the extent to which community policing within campus law enforcement agencies is influenced by the organizational structure, agency characteristics and campus characteristics.Design/methodology/approachThis study utilizes ordinary least squares regression modeling to examine community policing implementation. Data were drawn from a sample of 242 US colleges and universities included in the 2011–2012 Bureau of Justice Statistics (BJS) Survey of Campus Law Enforcement Agencies (SCLEA).FindingsFindings show that within-campus law enforcement agencies, greater levels of community policing are associated with more formalization, larger numbers of employees, a higher task scope and higher rates of on-campus property crime.Research limitations/implicationsUse of secondary data and reported crime rate limits the study. Future research should implement specialized surveys and qualitative methods to identify the specific needs and implementations of community policing.Originality/valueThis paper adds to the limited body of literature on the community policing in campus law enforcement through more recent data and the inclusion of campus community variables.

CEO succession: what we know and where to go?

2016 ◽  
Vol 3 (3) ◽  
pp. 222-264 ◽  
Author(s):  
Ormonde R. Cragun ◽  
Anthony J. Nyberg ◽  
Pat M. Wright
Keyword(s):  
Human Capital ◽  
Poor Performance ◽  
Chief Executive ◽  
Future Research ◽  
Ceo Succession ◽  
Capital Theory ◽  
Content Type ◽  
High Performing ◽  
Future Research Agenda ◽  
Ceo Selection

Purpose The purpose of this paper is to conduct a comprehensive analysis and synthesis of the splintered chief executive officer (CEO) succession literature and provide a unifying future research agenda. Design/methodology/approach This review content analyzes 227 relevant articles published after 1994. These articles examine the causes, process, replacement, and consequences of CEO succession. Findings The review develops a comprehensive typology, identifies gaps in the literature, and proposes opportunities for future research. For instance, the CEO succession literature can be classified along four primary dimensions: when, how, who, and consequences. These four primary dimensions are further explained by ten secondary factors and 30 tertiary components. Research opportunities include: enlarging the data pool to expand the repertoire of firms studied, incorporating the CEO’s perspective, and integrating CEO succession research with literatures in selection, turnover, and human capital theory. Practical implications Through integrating research across research domains, future research will be able to better predict when CEO succession will occur, how to avoid unwanted CEO succession, how to better implement CEO succession, and how to minimize negative aspects and maximize positive aspects of CEO succession for the firm and the CEO, as well as understand the consequences of CEO selection, and help move toward and understanding of how to prevent poor performance, and retain high performing CEOs. Originality/value This is the first comprehensive review since 1994. It creates a typology to guide and categorize future research, and shows ways to incorporate relevant, but often ignored literatures (e.g. human resources, psychology, decision making, and human capital).

The determinants of leasing decisions: an empirical analysis from Chinese listed SMEs

2016 ◽  
Vol 42 (8) ◽  
pp. 763-780 ◽  
Author(s):  
Tongxia Li ◽  
Rahimie Karim ◽  
Qaiser Munir
Keyword(s):  
Firm Size ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Small Sample ◽  
Future Research ◽  
Debt Ratio ◽  
Policy Makers ◽  
Content Type ◽  
Tax Rate ◽  
Financing Decisions

Purpose – The purpose of this paper is to investigate the determinants of leasing decisions for a sample of China’s non-financial small and medium-sized enterprises (SMEs). Design/methodology/approach – Pooled ordinary least squares and Tobit models are used to analyze five years of data (2009-2013) on the sample units, to find the determinants of leasing decisions after controlling for industry. In order to assess the robust of the results, the authors further apply instrumental variables methods. Findings – The results suggest that CEO ownership, tax rate, financial distress potential, and firm size are positively related to the operating lease share, whereas debt ratio, profitability, and tangibility are negatively linked to the operating lease share. In contrast, capital lease share increases with debt ratio, profitability, firm size, and strong corporate governance; it decreases with CEO ownership and financial distress potential. Research limitations/implications – Using a small sample might not be enough capture industry effects. Future research may gain more insights using sufficient sample and considering the types of leases as well as leased assets. Practical implications – This study offers evidences to the policy-makers who may adopt the practices to promote the development of leasing market. Furthermore, these results provide important implications to lessors in making operating strategy decisions and to potential lessees in making financing decisions. Originality/value – To the authors’ limited knowledge, this is the first study on leasing relies on publicly traded Chinese SMEs. The results of this study enrich the literature on the determinants of leasing in several ways.

scholarly journals CEO power and R&D investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christine Naaman ◽  
Li Sun
Keyword(s):  
Chief Executive ◽  
Ordinary Least Squares ◽  
Financial Accounting ◽  
Least Squares Regression ◽  
Ceo Power ◽  
Firm Level ◽  
Content Type ◽  
Negative Relation ◽  
The Impact ◽  
D Investment

Purpose This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

Consumer financial distress during economic downturn: evidence from five provinces of Zimbabwe

2020 ◽  
Vol 47 (9) ◽  
pp. 1123-1142
Author(s):  
Richard Chamboko ◽  
Rumbidzai K.T. Chamboko
Keyword(s):  
Peer Review ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Policy Implications ◽  
Economic Downturn ◽  
Least Squares Regression ◽  
Content Type ◽  
Factors Associated ◽  
Equality Of Means ◽  
Behavioural Factors

PurposeDespite the inescapable picture of hardships and circumstances in Zimbabwe, there has not been dedicated research focused on understanding the management of household finances, particularly to assess financial distress and how it varies among Zimbabweans. This study aims to use survey data to measure financial distress and ascertain the socioeconomic, demographic and behavioural factors associated with it among Zimbabweans.Design/methodology/approachA sample of 1,006 survey respondents from five provinces of Zimbabwe was used. The principal component analysis approach was used to create a composite financial distress score. The t-test for the equality of means and analysis of variance were used to test for the difference in financial distress between groups, whilst the ordinary least squares regression was used to determine the factors associated with financial distress after controlling for other factors.FindingsThe study found that consumer financial distress was mainly explained by locality (urban/rural and province), frequency and level of income (informality) and age. Having saved in the past 12 months did not significantly differentiate savers from non-savers on financial distress. The study also found that gender, level of education, marital status, role in household financial decision-making and role in household provisioning were not significant predictors of financial distress.Research limitations/implicationsThe findings have policy implications, especially for the government of Zimbabwe, its agencies and local authorities. Enacting policies that create opportunities for inclusive and sustainable livelihoods and economic growth should be the priority. In addition, instituting favourable policies that allow informal business to grow, formalise and integrate with the formal economy may help to sustainably grow the economy and alleviate the financial hardships among consumers. For consumers, adopting financial behaviours that ensure that they live within their means cannot be over emphasised.Originality/valueThis is the first paper to profile the socioeconomic, demographic and behavioural factors associated with financial distress during the economic downturn among the impoverished Zimbabweans.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2019-0640.

Campus law enforcement: the relationship between emergency preparedness and community policing

2020 ◽  
Vol 43 (5) ◽  
pp. 741-753
Author(s):  
Sherah L. Basham
Keyword(s):  
Law Enforcement ◽  
Community Policing ◽  
Emergency Preparedness ◽  
Ordinary Least Squares ◽  
Future Research ◽  
Least Squares Regression ◽  
Law Enforcement Agencies ◽  
Content Type ◽  
Campus Law Enforcement ◽  
The Relationship

PurposeThe purpose of this paper is to examine the relationship between emergency preparedness and community policing within campus law enforcement agencies, as well as agency and campus characteristics that impact the level of emergency preparedness activities.Design/methodology/approachUsing data from the 2011–2012 Survey of Campus Law Enforcement Agencies, this study employs ordinary least squares regression modeling to examine emergency preparedness and community policing relationships within 298 campus law enforcement agencies.FindingsCommunity policing is the greatest predictor of emergency preparedness in campus law enforcement agencies. This finding refutes arguments that emergency preparedness and community policing are incompatible policing innovations.Research limitations/implicationsThis study is limited by the use of secondary data. Future research should utilize survey measures to better isolate the roles and functions of community policing and emergency preparedness.Practical implicationsThe findings have implications for campus law enforcement agencies to view emergency preparedness and community policing activities as interrelated. Specifically, agency administration can benefit by taking a holistic approach to campus policing and preparedness.Originality/valueThis paper extends the current research in municipal policing to the campus police environment. This paper also adds to the limited body of literature on the relationships between community policing and emergency preparedness.

Calling out the laggards: shareholder activism and board gender diversity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
John P. Berns ◽  
Jaime L. Williams
Keyword(s):  
Gender Diversity ◽  
Chief Executive ◽  
Shareholder Activism ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Leadership Positions ◽  
Content Type ◽  
Shareholder Proposals ◽  
The Usa ◽  
Board Gender Diversity

Purpose While the presence of women in the boardroom has been steadily increasing, shareholders have taken action to push firms which lag in this area to add women to their boards. The purpose of this study is to examine whether firms with more gender homogenous (i.e. male-dominated) boards are disproportionately targeted with shareholder proposals calling for increased board gender diversity, how gender diversity among other firm leadership moderates this relationship, and whether firms respond. Design/methodology/approach Firth logistic regression is used to analyze the rare occurrence of a shareholder proposal within a sample of 7,226 firm year observations from S&P 1,500 firms in the USA between 2010 and 2017. Ordinary least squares regression is used to examine the subsequent three-year change in board gender diversity using a sample of 3,917 firm year observations. Findings The empirical findings indicate that firms with gender homogenous boards are more likely to incur shareholder proposals aimed at increasing board gender diversity. Having women in leadership positions (e.g. as the Chief Executive Officer) weakens this relationship. Finally, despite most proposals failing to pass, board gender diversity dramatically increases following the rendering of a proposal. Originality/value This study adds to the understanding of the principal-agent relationship, offering novel insights into shareholder responses to the lack of gender diversity among the board and firm responses to such activism. Furthermore, the authors add to the understanding of expectation violations with regard to gender diversity within firm boards. Finally, the authors find that women in other leadership positions insulate the firm from such shareholder activism – an important boundary condition of the findings.

CEO pay slice and acquisitions in Australia: the role of tournament incentives

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hoa Luong ◽  
Abeyratna Gunasekarage ◽  
Syed Shams
Keyword(s):  
Least Squares ◽  
Abnormal Return ◽  
Chief Executive ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Governance Environment ◽  
Long Run ◽  
Ceo Pay ◽  
Acquisition Announcements

PurposeThis paper investigates the influence of tournament incentives, measured by Chief Executive Officer (CEO) pay slice (CPS), on the acquisition decisions of Australian firms.Design/methodology/approachThis study applies ordinary least squares regression analyses to a sample of 1,429 acquisition observations announced by 986 unique Australian firms spanning the 2001–2015 period. Event study methodology was employed to capture the market reaction to acquisition announcements. Multinomial logit models, a two-stage least squares instrumental variable (IV) approach and propensity score matching (PSM) technique were performed for robustness and endogeneity correction purposes.FindingsThe results suggest that CPS has a positive and significant relationship with the announcement period abnormal return realised by acquirers, implying that executives are motivated to exert best efforts and support the CEO in making value-creating acquisitions. Further analyses reveal that management teams of high CPS firms demonstrate efficiencies in executing acquisitions. The positive relationship between the CPS and abnormal return is more pronounced in acquisitions of private targets, domestic targets and bidders with high-quality CEOs. These acquisitions make a significant contribution to the long-run performance of the firm, which provides support for the effort inducement hypothesis.Practical implicationsThe study's empirical evidence implies that the strong governance environment in Australia and a highly monitored acquisition market and compensation contracts motivates executives to exert their efforts to make value-enhancing acquisitions.Originality/valueThis paper appears to be the first investigation that makes a link between CPS in different components (i.e. short-term, long-term and total pay) as proxy for tournament incentives and the outcomes of both public and non-public acquisitions in the Australian setting.

A question of style

2016 ◽  
Vol 39 (4) ◽  
pp. 620-634 ◽  
Author(s):  
Jon Maskaly ◽  
Wesley Jennings
Keyword(s):  
Ordinary Least Squares ◽  
Future Research ◽  
Least Squares Regression ◽  
Content Type ◽  
Supervisory Styles ◽  
Police Supervisors ◽  
Organizational Differences ◽  
The Usa ◽  
Using Data ◽  
The Impact

Purpose The purpose of this paper is to attempt to replicate Engel’s (2001) styles of supervision using data from a new sample and including additional independent variables. Design/methodology/approach The data were collected from a sample of police supervisors (N=369) at three distinct locations throughout the USA. Bivariate analyses and ordinary least squares regression were used to analyze the data. Findings The authors find three of Engel’s four supervisory styles and find largely consistent results, with the exception of gender. Further, the authors find strong evidence for persistent agency-level effects. Originality/value Supervisory styles are important to consider, especially when trying to effectively control the behavior of subordinates. While this study cannot address the impact of organizational differences, the consistent agency-level effects suggest this as something that should be considered again in future research.

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