Climate change policies and carbon-related CEO compensation systems: an exploratory study of European companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Julija Winschel
Keyword(s):  
Climate Change ◽  
Ceo Compensation ◽  
Theoretical Perspective ◽  
Chief Executive ◽  
Time Frame ◽  
Business Practice ◽  
Short Term ◽  
Content Type ◽  
Climate Change Policies ◽  
Compensation Systems

Purpose In view of current climate change policies, this study aims to provide researchers, regulators, and business practice with the current picture of practices regarding carbon-related compensation granted to chief executive officers (CEO). To this end, it examines whether and to what extent European companies translate their carbon reduction strategies into carbon targets underlying their CEOs’ short-term and long-term compensation, what characteristics the carbon targets used commonly have in terms of their quality and time frame, and whether the carbon targets used differ among carbon-intensive, and less carbon-intensive companies. Design/methodology/approach Drawing on the stakeholder-agency theoretical perspective, this study explores the patterns of use and characteristics of carbon-related targets in CEO compensation. In this vein, a content analysis of corporate disclosure for the business years 2018 and 2019 is conducted for a European sample of 65 large listed companies from 16 countries and 11 industries. Findings The findings of this study show that albeit the trend toward new adoption, carbon-related CEO compensation systems are still uncommon. The results also reveal that carbon targets are mainly used to determine short-term compensation. Further, the findings highlight that carbon-related CEO compensation is almost equally widespread among carbon-intensive and less carbon-intensive companies. However, in terms of target quality, the study shows that carbon-intensive companies display greater heterogeneity and opacity. Originality/value By analyzing the characteristics of carbon targets and the prevalence of carbon-related CEO compensation for the first time, this study contributes to the stakeholder-agency theoretical perspective on corporate governance. In view of the European Green Deal and climate-related stakeholder demands, regulators and business practice are encouraged to recognize that carbon-related CEO compensation should gain momentum and the disclosure on this matter should become more transparent and comparable among companies and across industries.

Mapping the determinants of carbon-related CEO compensation: a multilevel approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Julija Winschel
Keyword(s):  
Climate Change ◽  
Corporate Governance ◽  
Ceo Compensation ◽  
Behavioral Science ◽  
Theoretical Perspective ◽  
Chief Executive ◽  
Content Type ◽  
Change Impact ◽  
Research Propositions

Purpose In view of the current climate change emergency and the growing importance of the climate-related accountability of companies, this paper aims to advance a comprehensive understanding of the determinants of carbon-related chief executive officer (CEO) compensation. Design/methodology/approach Building on the agency-theoretical perspective on executive compensation and existing work in the fields of management, corporate governance, cultural studies, and behavioral science, this paper derives a multilevel framework of the determinants of carbon-related CEO compensation. Findings This paper maps the determinants of carbon-related CEO compensation at the societal, organizational, group, and individual levels of analysis. It also provides research propositions on the determinants that can support and challenge the implementation of this instrument of environmental corporate governance. Originality/value In the past literature, the determinants of carbon-related CEO compensation have remained largely unexplored. This paper contributes to the academic discussion on environmental corporate governance by showcasing the role of interlinkages among the determinants of carbon-related CEO compensation and the possible countervailing impacts. In view of the complex interdisciplinary nature of climate change impact, this paper encourages businesses practitioners and regulators to intensify their climate change mitigation efforts and delineates the levers at their disposal.

Bank capital, liquidity and risk in Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emmanuel Carsamer ◽  
Anthony Abbam ◽  
Yaw N. Queku
Keyword(s):  
Capital Accumulation ◽  
Trust Management ◽  
Theoretical Perspective ◽  
Generalized Method Of Moments ◽  
Basel Iii ◽  
Bank Capital ◽  
Short Term ◽  
Content Type ◽  
Coverage Ratio ◽  
Liquidity Measures

Purpose Capital, risk and liquidity are the vitality of the banking industry, which can improve the efficiency of banking and promote the efficiency of resource allocation. The purpose of this study is to examine how Basel III new liquidity ratios affect bank capital and risk adjustments and how banks respond to the new liquidity rules. Design/methodology/approach The authors adopted the system generalized method of moments (GMM) to examine how Basel III new liquidity ratios affect bank capital and risk adjustments and how banks respond to the new liquidity rules. Based on the call reports data from banks, GMM was used to test the hypotheses that new liquidity ratios affect bank capital and risk adjustments, as well as how banks respond to the regulation. Findings The results indicate banks targeted capital, risk and liquidity and simultaneously coordinate short-term adjustments in capital and risk. New liquidity measures enable banks to coordinate risk and liquidity decisions. Short-term adjustments in new liquidity rules inversely impact bank capital. Short-term adjustments in new liquidity rules inversely impact bank capital and capital adjustments adversely affect changes in the liquidity coverage ratio (LCR). Research limitations/implications The primary results revealed that Ghanaian banks simultaneously coordinate and target capital, risk exposure and liquidity level. Also, capital adjustments positively influence risk adjustments and vice versa while bidirectional negative coordination exists between bank capital and risk on one hand and liquidity on the other hand. Short-term adjustments in new liquidity rule inversely impact bank capital and capital adjustments adversely affect changes in the LCR. The findings partially confirm the theoretical predictions of Repullo (2005) regarding the negative links between capital, risk and liquidity but the authors have higher capital induces higher risk. Practical implications Banks should balance off their targeted risk and liquidity in order not to sacrifice capital accumulation for liquidity. Originality/value This research offers new contributions in the research of bank management of capital and liquidity toward banks during a financial crisis from a theoretical perspective and trust management from an applicative perspective.

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

CEO compensation, CEO attributes and tax aggressiveness: evidence from French firms listed on the CAC 40

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sawssan Jbir ◽  
Souhir Neifar ◽  
Yosra Makni Fourati
Keyword(s):  
Ceo Compensation ◽  
Chief Executive ◽  
Least Square ◽  
Annual Reports ◽  
Content Type ◽  
Tax Aggressiveness ◽  
Ceo Tenure ◽  
Negative Effect ◽  
The Impact ◽  
Ceo Attributes

Purpose This paper aims to examine the impact of CEO (chief executive officer) compensation and CEO attributes on the level of tax aggressiveness of French companies. Design/methodology/approach The sample comprises 180 firm-year observations of 40 companies listed on the CAC 40 during the period ranging from 2008 to 2018. For the purpose of overcoming the problems of heteroscedasticity and autocorrelation, the authors apply the generalized least square panel regression. Findings This study’s results corroborate the importance of CEO compensation and CEO attributes as determinants of tax aggressiveness. In addition, the authors come up with the fact that CEO compensation has a negative effect on tax aggressiveness, and that older CEOs and CEOs with accounting expertise are negatively linked with tax aggressiveness. The authors also find out that there is a positive relationship between the CEO tenure and tax aggressiveness. Moreover, the authors report that foreign CEOs are more likely to engage in tax aggressiveness practices than local CEOs. Research limitations/implications The unavailability of all annual reports and the use of only one proxy to measure tax aggressiveness present limitations. This study shows significant implications for shareholders, regulators and researchers. As a matter of fact, shareholders will observe the effect of appointing a foreign CEO on the tax aggressiveness level. This study may also provide regulators with new ideas regarding the role of the CEO and its impact on aggressive decision-making. And it brings forth new insight for researchers through adding a foreign CEO as a new determinant of tax aggressiveness. Originality/value According to the authors’ knowledge, this study is the first to provide empirical evidence regarding the effect of both CEO compensation and CEO attributes on tax aggressiveness. It also looks into the impact of a foreign CEO on tax aggressiveness.

Minding the gap: the effect of CEO underpayment on firm-specific knowledge

2020 ◽  
Vol 24 (9) ◽  
pp. 2107-2125
Author(s):  
Linlin Wang ◽  
Zhaofang Chu ◽  
Wan Jiang ◽  
Yifan Xu
Keyword(s):  
Ceo Compensation ◽  
Equity Theory ◽  
Chief Executive ◽  
Specific Knowledge ◽  
Data Set ◽  
Content Type ◽  
Knowledge Based ◽  
Negative Effect ◽  
Compensation Gap ◽  
Specific Human Capital

Purpose This study aims to build on equity theory to assess the effect of chief executive officer (CEO) underpayment on the accumulation of firm-specific knowledge, accounting for the moderating effects of the CEO compensation gap and the clarity of the board’s informal hierarchy. Design/methodology/approach This study starts with all firms listed in the Execucomp database for the period 1992 to 2006. Then, all data sources are merged and entries with missing information are excluded. The final data set used for model estimations includes 1,152 firm-year observations. The command xtreg in Stata 12 with the fixed-effect option (fe) is used to estimate the relationship between CEO underpayment and firm-specific knowledge. Findings This study proposed and examined the role of CEO underpayment in discouraging CEO willingness to invest firm-specific human capital and, accordingly, to adopt a strategy of accumulating lower levels of firm-specific knowledge assets. The empirical analyses strongly support this argument. Moreover, CEO compensation gaps and the informal hierarchy of boards negatively moderated this relationship. That is, CEO underpayment had a weaker negative effect on firm-specific knowledge when the CEO compensation gap and the clarity of the board’s informal hierarchy were high. Originality/value Prior studies from the knowledge-based perspective have focused on the importance of firm-specific knowledge in enabling a firm to achieve superior financial performance. However, relatively little attention has been paid to CEOs’ willingness to accumulate firm-specific knowledge. The present study contributes to the knowledge-based view of the firm. This study integrates equity theory with the knowledge-based view of the firm by highlighting how unfair compensation of CEOs may discourage them to fully realize a firm’s potential to generate specific knowledge. By incorporating the fairness issue of CEO compensation into the knowledge-based view, this study contributes to a deeper understanding of the origins of firm-specific knowledge.

The effects of global financial crisis on the relationship between CEO compensation and earnings management

2020 ◽  
Vol 28 (2) ◽  
pp. 389-408 ◽  
Author(s):  
Oheneba Assenso-Okofo ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Global Financial Crisis ◽  
Chief Executive ◽  
Content Type ◽  
Multivariate Tests ◽  
Executive Officers ◽  
The Relationship

Purpose This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals. Design/methodology/approach The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust. Findings The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC. Practical implications The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances. Originality/value So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.

EU drought response may focus on short-term fixes

2018 ◽  
Keyword(s):  
Climate Change ◽  
Agricultural Policy ◽  
Food Production ◽  
Weather Conditions ◽  
Food Prices ◽  
Drought Response ◽  
Short Term ◽  
Content Type ◽  
Eu Policies

Significance The resulting drought in many parts of the continent and its impact on agriculture have highlighted the threat posed by climate change to future food production. It has also raised questions about the role of EU policies in exacerbating or mitigating this threat. Impacts Weather conditions in Europe and elsewhere will increase the prices of many agricultural commodities. Higher food prices will affect poorer households disproportionately. Reforming EU agricultural policy will remain a secondary consideration, after the priorities of producers and wider budgetary battles.

Peru floods may bring economic woes, political gains

2017 ◽  
Keyword(s):  
Climate Change ◽  
Natural Disasters ◽  
Pacific Coast ◽  
Public Investment ◽  
Social Suffering ◽  
Short Term ◽  
Content Type ◽  
The Pacific ◽  
The Social

Significance Landslides and flooding the length of the Pacific coast of Peru have caused widespread damage to housing and infrastructure, revealing the vulnerability of the country’s largest cities to natural disasters. For President Pedro Pablo Kuczynski’s administration, the crisis brings short-term political respite, but also new problems of how to respond effectively to the social suffering caused. Impacts Responding to the crisis will involve reconfiguring this year’s budget, particularly increasing public investment. Spending priorities in other areas will make it hard to grapple with long-term preventative work. As one of the world’s most exposed countries to climate change, the costs of adaptation will be large.

South-east Asian green bond demand will soon grow

2017 ◽  
Keyword(s):  
Climate Change ◽  
East Asia ◽  
East Asian ◽  
Bond Market ◽  
Bond Markets ◽  
South East Asia ◽  
Financial Instruments ◽  
Content Type ◽  
Investor Confidence ◽  
Climate Change Policies

Subject Prospects for the South-east Asian green bond market. Significance South-east Asia has been slow to capitalise on the global boom in 'green' financing, but is likely to become a prominent issuance source within a few years. Drivers will include demand for infrastructure funds and commitments to climate change policies. Impacts Regulators will need to keep pace with the industry's evolution, or risk undermining investor confidence. Immature bond markets will hamper issuance growth in emerging ASEAN economies. As they embrace more sustainable lending policies, banks will be important in developing green bonds. Green bonds face competition from other, cheaper financial instruments.

Saudi demographics may ultimately drive discontent

2021 ◽  
Keyword(s):  
Climate Change ◽  
Social Change ◽  
Population Growth ◽  
Brain Drain ◽  
Rural Areas ◽  
Short Term ◽  
Content Type ◽  
Economic Role ◽  
Role Of Religion

Significance This means the leadership must manage a significant social change, catalysed by an engaged and 'globalised' youth segment. At the same time, the economy has to accommodate population growth even as its hydrocarbon base faces uncertainties from climate change. Impacts Beyond major urban centres such as Riyadh and Jeddah, much of the country will remain closed and conservative. Moves to curb the influence of the clerical establishment will persist, but the central role of religion will prove resistant to change. In the short term, women’s rising economic role will disrupt familial norms only among the elite. The current shrinking space for expressing discontent could contribute to a brain drain from the kingdom. By 2035, there will be a higher likelihood of protests, both virtual and physical, especially in rural areas.

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