The impact of public scrutiny on executive compensation

2019 ◽  
Vol 27 (3) ◽  
pp. 303-323
Author(s):  
Andrew Glen Carrothers
Keyword(s):  
Executive Compensation ◽  
Chief Executive ◽  
Multivariate Regression Analysis ◽  
Government Support ◽  
Executive Pay ◽  
Data Set ◽  
Content Type ◽  
Public Scrutiny ◽  
The 2008 Financial Crisis ◽  
The Impact

Purpose This paper aims to examine the impact of public scrutiny on chief executive officer (CEO) compensation at Standard & Poor’s (S&P) 500 firms. Design/methodology/approach This paper uses the unique opportunity provided by the 2008 financial crisis and, in particular, government support and legislated compensation restrictions in the US Department of the Treasury’s Troubled Asset Relief Program (TARP). It aggregates monetary and non-monetary executive compensation information from 2006 to 2012, with firm- and manager-level data. It presents univariate summary compensation results and uses multivariate regression analysis to isolate the impact of public scrutiny and legislated compensation restrictions on executive pay. Findings Overall, the results are consistent, with increased public scrutiny having a lasting impact on perks and temporary impact on wage and legislated compensation restrictions having a temporary impact on wage. Changes in specific perk items provide evidence on which perks firms perceive as excessive and which provide common value. Originality/value The paper contributes to the discussion of perks as excess by introducing a novel data set of perk compensation at S&P500 firms and by studying how firms choose to alter levels of specific perk items in response to increased public scrutiny and legislated compensation restrictions. The paper contributes to the literature on executive pay as there has been little inquiry into the impact of public scrutiny on compensation. Public scrutiny could be an important source of external governance if firms change behavior in response to explicit and implicit scrutiny costs.

Does CEO duality give more influence over executive pay to the majority or minority shareholder? (A survey of Brazil)

2016 ◽  
Vol 16 (1) ◽  
pp. 96-115 ◽  
Author(s):  
Enoima Abraham ◽  
Gurcharan Singh
Keyword(s):  
Executive Compensation ◽  
Governance Structure ◽  
Minority Shareholder ◽  
Executive Pay ◽  
Minority Shareholders ◽  
Managerial Performance ◽  
Ceo Duality ◽  
Content Type ◽  
Conditional Effects ◽  
The Impact

Purpose The purpose of this paper is to focus on comparing the influence of majority and minority shareholders on executive compensation under conditions of CEO duality, examining majority and minority shareholder influences by measuring their investment and return activity. The paper seeks to uncover how CEO duality changes the impact the two categories of shareholders have on executive compensation, especially in an emerging nation. Design/methodology/approach In total, 30 corporations out of the 70 corporations listed on the BM&F Bovespa (a Brazilian stock market) were used for the paper. Quarterly data were collected on the companies from the Datastream database. The paper conducted a moderated regression analysis on the data to determine the conditional effects of majority and minority holders’ investment and returns on executive compensation. Findings There are incentives for executives meeting majority shareholder objectives, but minority shareholders’ influences act as a disincentive for executives. Only the influence of blockholders by their returns is affected by the separation of the roles of CEO and Chairman. The effect is such that firms with a separation of the roles have their executives rewarded in line with increments to the returns made to blockholders, but firms that have the roles merged pay a high wage that is inconsistent with managerial performance. Finally, the majority of variation in executive pay levels can be attributed to individual company traits. Research limitations/implications The paper’s sample is biased to firm which had publicly available data on the total compensation payable to their top executives. Practical implications Advocates of minority shareholder rights may need to exercise patience with the implementation of more formalised governance structure, as they are not providing protection for minority shareholders within the period studied. Originality/value The paper provides empirical evidence within the Brazilian context of minority shareholder effects on executive compensation and the effect of CEO duality on the relationship.

Executive pay bandwagon and stock price crash risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hong Luo ◽  
Junfeng Wu ◽  
Wan Huang ◽  
Yongliang Zeng
Keyword(s):  
Earnings Management ◽  
Internal Control ◽  
Stock Price ◽  
Tax Avoidance ◽  
Crash Risk ◽  
Executive Pay ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose This paper aims to investigate the impact of executives’ self-interested behaviors induced by the pay bandwagon on stock price crash risk in Chinese listed firms and attempt to shed light on the influencing channels of this effect. Design/methodology/approach The empirical analysis is based on the panel data set which contains information on the executives and stock price of 11,710 firm-year observations over the period 2007–2015. The multiple linear regression models are implemented to examine whether the executive pay bandwagon affects corporate future stock price crash risk. Then, earnings management, tax avoidance and overinvestment are applied as the behavior choice of executive pay bandwagon to analyze the potential influencing channels. Findings Results indicate that the lower the executives’ pay is than the median pay level of executives in firms of similar size and industry, incentives of pay bandwagon are stronger, leading to a higher future stock price crash risk. Moreover, evidence shows that the positive relationship between executive pay bandwagon and crash risk is attenuated when firms have strong external monitoring mechanisms such as Big Four auditors, cross-listing in the Hong Kong stock exchange, high marketization process and high institutional ownership. Then, some weak evidence supports that internal governance such as internal control plays the same moderating role. In addition, based on the path test, the stock price crash effect of the executive pay bandwagon has a complete tax avoidance intermediary effect and a partial earnings management intermediary effect. Originality/value This study contributes to the executive compensation literature from a psychological perspective on the economic consequences research brought about by the pay bandwagon for China’s listed firms. Moreover, this paper provides a supplement to the literature on factors which is completely different from previous studies that affect the future stock price crash risk.

scholarly journals How do executive pay and its gap with employee pay influence corporate performance? Evidence from Thailand tourism listed companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Laurence Ferry ◽  
Guanming He ◽  
Chang Yang
Keyword(s):  
Regression Analysis ◽  
Firm Performance ◽  
Executive Compensation ◽  
Corporate Performance ◽  
Listed Companies ◽  
Executive Pay ◽  
Short Term ◽  
Pay Gap ◽  
Content Type ◽  
The Impact

PurposeThe authors investigate how executive pay and its gap with employee pay influence the performance of Thailand tourism listed companies.Design/methodology/approachThe authors manually collect data on the executives' and employees' remunerations for Thailand tourism listed companies and use the data for the authors’ OLS regression analysis. To check the robustness of the results to potential endogeneity issues, the authors employ the two-stage least-squares regression analysis and the impact threshold for a confounding variable approach.FindingsThe authors find that short-term executive compensation enhances firm performance, and that long-term executive compensation reduces the likelihood of unfavorable corporate performance. The authors also find that the gap in short-term pay between executives and employees has an inverted-U relation with firm performance.Research limitations/implicationsThis study suggests that higher executive pay relative to employee pay could encourage executives to work hard to improve corporate performance, but that too large a pay gap between executives and employees could impair employees' morale and harm firm performance.Practical implicationsIt is important for tourism companies to not only pay executives well but also avoid too large a pay gap between executives and employees.Social implicationsThis study implies the important role of compensation design in contributing to employee engagement and good performance for tourism firms.Originality/valueThis study sheds light on agency problems between executives and employees in tourism companies and provides new evidence and insights on compensation research in the tourism sector in emerging markets.

scholarly journals Perceptions on effectiveness of public policies supporting entrepreneurship and internationalization

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joao Campos ◽  
Vitor Braga ◽  
Aldina Correira ◽  
Vanessa Ratten ◽  
Carla Marques
Keyword(s):  
Success Rate ◽  
Government Policy ◽  
Public Policies ◽  
Country Of Origin ◽  
Government Support ◽  
Business Strategies ◽  
Data Set ◽  
Content Type ◽  
The Impact ◽  
Gem Data

PurposePublic policies provide a way for governments to influence the effectiveness of business strategies in the international marketplace. The main goal of this article is to show the importance of key aspects for policymaking at the national level and, secondly, to try to evaluate if public policies and programmes are effective in the entrepreneurship and internationalization of firms.Design/methodology/approachThe Global Entrepreneurship Monitor (GEM) data set was used to perform a multivariate analysis through multiple linear regression.FindingsThe economic and financial crisis that has plagued the world recently has incentivized entrepreneurs to be more creative and encouraged policymakers to be more effective in the important role they can play in economic growth. Thus, the findings indicate that government support can help firms be more entrepreneurial and increase their level of internationalization in the marketplace. The findings indicate that entrepreneurship is an important growth factor, so it is important to understand government support can be effective in stimulating business activity.Research limitations/implicationsThis study focusses on perceptions of government policy based on the GEM database, which means it is limited to subjective assessments rather than objective measures.Practical implicationsThe findings of this study will help business managers focus on their country of origin as a way to stress the impact of government policies on reputation in the international marketplace.Social implicationsGovernments need to acknowledge how their entrepreneurial policies regarding innovation and internationalization affect business success rate. This means emphasizing the trustworthiness and credibility of their policies.Originality/valueThis article highlights the need for more entrepreneurial policymaking that emphasizes government reputational affects in the success rate of firms in the international marketplace. This provides a way for firms to gain better recognition from country-of-origin effects but also for policymakers to prioritize international strategic efforts. By comparing data from different countries, the article highlights the different ways government policy can be utilized strategically in order to increase entrepreneurship and internationalization rates.

Ownership structure, board characteristics and dividend policy: evidence from Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajab Khan
Keyword(s):  
Ownership Structure ◽  
Dividend Policy ◽  
Critical Mass ◽  
Relevant Literature ◽  
Chief Executive ◽  
Data Set ◽  
Content Type ◽  
Board Characteristics ◽  
Female Directors ◽  
The Impact

Purpose This study aims to investigate the impact of ownership structure and board characteristics on dividend policy in the listed Turkish firms between 2013 and 2019. Design/methodology/approach This study uses the probability of paying dividends, dividend payout ratio and dividend yield measures. The suitable regression procedures (logit, probit and Tobit models) are used to examine the research hypotheses by focusing on a panel data set drawn from the Borsa Istanbul (BIST) 100 index, excluding financial and utility firms. Findings The empirical findings indicate that institutional and concentrated ownerships are significant and positively associated with dividend payouts, whereas family ownership does not influence dividend policy. On the other end, board size is positive, while chief executive officer duality is negatively related to dividend policy. Additionally, the female directors and board independence are insignificant in influencing firms to pay high dividends. Research limitations/implications Future researchers can validate this paper’s findings by considering the stock dividends as well. Additionally, future researchers may investigate the relationship between these constructs by extending the sample size of firms listed on BIST or in other emerging markets. Practical implications This study’s findings may serve policymakers, regulators, investors and academic researchers to get valuable guidance from relevant literature. The Turkish firms may improve dividend policy by implementing the regulatory framework introduced by the Capital Markets Law in 2012 for effective monitoring and protecting the minority shareholders’ rights. The controlling shareholders may alleviate principal-principal conflicts by ensuring the independence of directors and increasing the number of female directors according to the critical mass of at least 30% of board members. Originality/value This study contributes to agency theory and signaling theory by considering ownership structure and board attributes among Turkish firms related to dividend payments.

Empirical evidence of deep learning in learning communities

2018 ◽  
Vol 10 (3) ◽  
pp. 311-321
Author(s):  
Kara Smith ◽  
Robin Lovgren
Keyword(s):  
Deep Learning ◽  
Learning Communities ◽  
Empirical Evidence ◽  
Student Performance ◽  
Multivariate Regression Analysis ◽  
Individual Student ◽  
Final Exam ◽  
Data Set ◽  
Content Type ◽  
The Impact

PurposeThe purpose of this paper is to investigate whether learning communities (LCs), defined as a cohort of students jointly enrolled in two distinct courses, increase “deep learning” in either or both courses. This study focuses on the impact of learning communities in quantitative courses.Design/methodology/approachThe hypothesis is tested using a unique data set including individual student performance and characteristics collected from students enrolled in an LC of Principles of Microeconomics and Elementary Statistics. The sample also includes students enrolled in each course separately which allows for testing between groups. The final exam in each course contained questions designed specifically to test deep learning. The design facilitates the use of multivariate regression analysis to examine the correlation between learning in communities and deep learning, holding constant other possible elements of student success.FindingsDespite perceptions among the sample student population that learning increases in both courses as a result of the LC format, the empirical evidence does not reveal any statistically significant increase in deep learning as a result of learning in community. However, the sample is more introverted than the average college student which may meaningfully impact the results.Research limitations/implicationsThere are a number of important motivations for implementing an LC program that are not measured here. These include an increased sense of community among students, breadth (rather than depth) of knowledge, and awareness of the interconnectedness of learning across disciplines. However, to the extent that university instructors are motivated to ensure learning in their own discipline, this resource-intensive strategy may not be the most suitable approach in quantitative courses.Originality/valueLearning communities continue to be a popular pedagogical technique and curriculum requirement, particularly at teaching-focused universities. This research offers an empirical approach to measuring one aspect of their value which is typically left to conceptual or qualitative study.

Executive compensation and securitization: pre-and post-crisis

2014 ◽  
Vol 15 (4) ◽  
pp. 437-457 ◽  
Author(s):  
Elizabeth Cooper ◽  
Andrew Kish
Keyword(s):  
Executive Compensation ◽  
Pay For Performance ◽  
Chief Executive ◽  
Executive Pay ◽  
Pay Gap ◽  
Content Type ◽  
Ceo Pay ◽  
The Difference ◽  
Recent Financial Crisis ◽  
The Relationship

Purpose – The purpose of this paper is to study bank executive compensation and securitization, two important strategic developments in finance that are central to the debate on the cause of the crisis. Design/methodology/approach – We study the relationship between securitization and executive pay in a sample of US banks from 2001 to 2010, using a series of multivariate regression models to test our hypotheses. Findings – Bank Chief Executive Officer (CEO) pay exhibits a positive pay-for-performance relationship. Since the crisis, this relationship is weakened. For banks that securitize, we find that prior to the crisis, higher securitization activity led to higher CEO compensation levels. While we do not find that securitization is related to bank CEO pay gap (the difference between CEO and the next-highest paid bank executive), we do see that bank ratings are a factor in pay gap and compensation level. Research limitations/implications – Bank regulatory ratings influence the relationship between compensation and securitization. Also, the relationship differs pre- and post-crisis. Originality/value – Our study is unique for several reasons. First, we look at the relationship between compensation and securitization over a time period that includes the recent financial crisis. Second, we include an analysis of pay gap. Third, we include bank regulatory ratings, which are proprietary and therefore not available for use in many banking studies.

Increasing revenue and attendance in Canadian Baptist churches

2015 ◽  
Vol 42 (12) ◽  
pp. 1071-1089
Author(s):  
Alan Chan ◽  
Bruce G. Fawcett ◽  
Shu-Kam Lee
Keyword(s):  
Church Health ◽  
Eastern Canada ◽  
Data Set ◽  
Content Type ◽  
Factors Affecting ◽  
Scarce Resources ◽  
Baptist Churches ◽  
And Performance ◽  
The Impact ◽  
Simulation Exercises

Purpose – Church giving and attendance are two important indicators of church health and performance. In the literature, they are usually understood to be simultaneously determined. The purpose of this paper is to estimate if there a sustainable church congregation size using Wintrobe’s (1998) dictatorship model. The authors want to examine the impact of youth and adult ministry as well. Design/methodology/approach – Using the data collected from among Canadian Baptist churches in Eastern Canada, this study investigates the factors affecting the level of the two indicators by the panel-instrumental variable technique. Applying Wintrobe’s (1998) political economy model on dictatorship, the equilibrium level of worship attendance and giving is predicted. Findings – Through various simulation exercises, the actual church congregation sizes is approximately 50 percent of the predicted value, implying inefficiency and misallocation of church resources. The paper concludes with insights on effective ways church leaders can allocate scarce resources to promote growth within churches. Originality/value – The authors are the only researchers getting the permission from the Atlantic Canada Baptist Convention to use their mega data set on church giving and congregation sizes as per the authors’ knowledge. The authors are also applying a theoretical model on dictatorship to religious/not for profits organizations.

Women on the board of directors and corporate tax aggressiveness in Australia

2016 ◽  
Vol 29 (3) ◽  
pp. 313-331 ◽  
Author(s):  
Grant Richardson ◽  
Grantley Taylor ◽  
Roman Lanis
Keyword(s):  
Board Of Directors ◽  
Selection Bias ◽  
Tax Avoidance ◽  
Multivariate Regression Analysis ◽  
Corporate Tax ◽  
Content Type ◽  
Tax Aggressiveness ◽  
Self Selection ◽  
The Board Of Directors ◽  
The Impact

Purpose This paper aims to investigate the impact of women on the board of directors on corporate tax avoidance in Australia. Design/methodology/approach The authors use multivariate regression analysis to test the association between the presence of female directors on the board and tax aggressiveness. They also test for self-selection bias in the regression model by using the two-stage Heckman procedure. Findings This paper finds that relative to there being one female board member, high (i.e. greater than one member) female presence on the board of directors reduces the likelihood of tax aggressiveness. The results are robust after controlling for self-selection bias and using several alternative measures of tax aggressiveness. Research limitations/implications This study extends the extant literature on corporate governance and tax aggressiveness. This study is subject to several caveats. First, the sample is restricted to publicly listed Australian firms. Second, this study only examines the issue of women on the board of directors and tax aggressiveness in the context of Australia. Practical implications This research is timely, as there has been increased pressure by government bodies in Australia and globally to develop policies to increase female representation on the board of directors. Originality/value This study is the first to provide empirical evidence concerning the association between the presence of women on the board of directors and tax aggressiveness.

Ownership as a determinant of chairperson activity: a study of Nordic listed companies

2015 ◽  
Vol 7 (4) ◽  
pp. 412-428
Author(s):  
Tor Brunzell ◽  
Jarkko Peltomäki
Keyword(s):  
Working Hours ◽  
Chief Executive ◽  
Ownership Concentration ◽  
Content Type ◽  
Listed Firms ◽  
Concentrated Ownership ◽  
The Board Of Directors ◽  
The Impact ◽  
The Empirical Analysis ◽  
A Company

Purpose – The purpose of this study is to explicitly focus on the roles of ownership concentration, ownership by the board, the chief executive officer (CEO) and the chairperson in the involvement and capabilities of chairpersons and other governors in their work. Design/methodology/approach – In this study, the authors investigate the impact of the concentration of ownership, the ownership of the board, the CEO and the chairperson on the chairperson’s activity when the roles of the chairperson and the CEO are separated The empirical analysis of this study is based on a survey sent to Nordic listed firms. Findings – The results show that the ownership characteristics of a company are important in determining the chairperson’s working hours, the chairperson’s communication with the CEO and the performance of governance activity. In addition, the authors found that while the ownership of the chairperson and the board of directors and ownership concentration improve governance activity, CEO ownership may undermine governance activity. Research limitations/implications – The primary implication of the study is that both ownership by internal governors and ownership concentration play an important role in determining the involvement of internal corporate governors. Originality/value – The study provides unique evidence that ownership by the chairperson, concentrated ownership and ownership by the board can potentially mitigate the costs of separating the roles of the chairperson and the CEO.

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