SEC enforcement actions getting up close and personal

2016 ◽  
Vol 17 (1) ◽  
pp. 131-132
Author(s):  
Matthew E. Kaplan ◽  
Alan H. Paley ◽  
Jonathan R. Tuttle
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Audit Committee ◽  
Chief Executive ◽  
Chief Financial Officers ◽  
Securities Fraud ◽  
Content Type ◽  
Securities Law ◽  
Public Company ◽  
Executive Officers

Purpose To alert public company management and directors to several recent SEC enforcement actions involving executives and other senior personnel arising out of securities law violations. Design/methodology/approach Reviews a series of enforcement actions against four chief executive officers, four chief financial officers, an audit committee chair, and one outside auditor (BDO USA LLC) and five of its partners arising out of securities law violations by four different corporations (MusclePharm Corporation, Bankrate, Inc., KIT Digital, Inc. and General Employment Enterprises, Inc.). Each of the actions involved financial reporting and disclosure violations. Also highlights the need for directors and senior management to maintain a sharp focus on their company’s controls and disclosure practices. Findings The SEC’S actions may portend renewed determination by the agency to hold executives and directors, as well as outside professionals, accountable for securities fraud and disclosure violations committed by corporations. Originality/value Practical guidance from experienced securities lawyers.

scholarly journals Top executive compensation in less developed capital markets

2015 ◽  
Vol 15 (1) ◽  
pp. 122-133 ◽  
Author(s):  
Ivo Nuno Pereira ◽  
José Paulo Esperança
Keyword(s):  
Executive Compensation ◽  
Capital Markets ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Chief Financial Officers ◽  
Tobit Regression ◽  
Content Type ◽  
Variable Pay ◽  
Tobit Regression Analysis ◽  
Executive Officers

Purpose – This paper aims to study the determinants of variable compensation for top Portuguese executives (chief executive officers, chief financial officers and commercial directors). Design/methodology/approach – Data from 101 firms were collected through an email questionnaire sent to the human resource directors of 500 largest and best Portuguese firms of Exame, a business newspaper. A Tobit regression analysis was used to estimate the basic equation of the study. Findings – The conclusions are generally consistent with findings obtained in more developed capital markets. It was found that public and older corporations are more intensive users of variable pay, consistent with the agency theory prediction. A location in the centre of economic activity and a higher executive education increase the propensity to receive higher levels of salary in the form of variable compensation. The relation between compensation and performance was more elusive. Research limitations/implications – There are limitations as to the extrapolation of the obtained results, as the level of potential idiosyncrasy cannot be measured. Ideally, the study should be replicated in different contexts to control for country-specific influences. Nevertheless, the main finding that performance-related pay mechanisms are less used in countries where public corporations and potential agency problems are less pervasive should hold. Originality/value – As the focus is on a small economy with a developing capital market, this paper contributes to executive compensation literature that has mostly analysed firms based in well-developed capital markets, with a higher separation of ownership and control (Anglo-Saxon countries).

Female executives and corporate governance

2017 ◽  
Vol 43 (10) ◽  
pp. 1056-1072 ◽  
Author(s):  
Emilia Vähämaa
Keyword(s):  
Corporate Governance ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Chief Financial Officers ◽  
Gender Quotas ◽  
Content Type ◽  
Takeover Defenses ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Executive Officers

Purpose The purpose of this paper is to examine whether the gender of the top executives is associated with the strength of corporate governance mechanisms within a firm. Design/methodology/approach The paper uses panel and instrumental variable regressions on an eight-year sample of the S&P 1,500 firms. Findings The results indicate that firms with female Chief Executive Officers (CEOs) and Chief Financial Officers have higher quality governance practices. Moreover, female CEOs are documented to have the most significant influence on the governance attributes related to the board of directors and takeover defenses mechanisms. Originality/value Overall, these findings indicate that the gender of the firm’s executives may have important implications for the strength of corporate governance. The paper promotes the importance of the recent national policies in numerous countries on gender quotas at the executive level.

CEO Financial Background and Audit Pricing

2016 ◽  
Vol 30 (3) ◽  
pp. 325-339 ◽  
Author(s):  
Rachana Kalelkar ◽  
Sarfraz Khan
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Work Experience ◽  
Audit Committee ◽  
Reporting Quality ◽  
Chief Executive ◽  
Audit Fees ◽  
Fixed Effect Model ◽  
Audit Pricing ◽  
Advantages And Disadvantages

SYNOPSIS Accounting scholars theorize that audit price is a function of a client's audit and business risk. Existing research finds that the functional expertise of Chief Executive Officers (CEOs) in finance improves financial reporting quality (Matsunaga, Wang, and Yeung 2013), increases profitability, and reduces the likelihood of firm failure (Custodio and Metzger 2014). These factors suggest that auditors' engagement risk decreases when incumbent CEOs possess financial expertise, raising the likelihood that auditors will charge these firms lower fees. In this study, we examine whether CEOs' work experience in accounting- and finance-related jobs affects audit fees. Using a panel of U.S. firms between 2004 and 2013, we find that firms that have a financial expert CEO pay lower audit fees. Our results are robust to various specifications, including firm-fixed effect model and specifications that control for other CEO- and Chief Financial Officer (CFO)-specific and audit committee characteristics. Our findings thus add to the literature on the advantages and disadvantages of a functional background of top managers and how this background can create value for a firm through savings in audit fees.

Good times, bad times: the stock market performance of firms that own high value brands

2016 ◽  
Vol 50 (5/6) ◽  
pp. 670-694 ◽  
Author(s):  
Kevin Voss ◽  
Mayoor Mohan
Keyword(s):  
Chief Executive Officers ◽  
Stock Price ◽  
Ad Hoc ◽  
Chief Executive ◽  
Share Price ◽  
Content Type ◽  
Price Performance ◽  
Stock Market Performance ◽  
Using Data ◽  
Executive Officers

Purpose The purpose of the this paper is to correct a deficiency in the published literature by examining the share price performance of firms that own high-value brands in uptrending, downtrending and sideways markets. Design/methodology/approach The authors examined stock price performance for an index of firms that owned brands in the Interbrand list of the “Best Global Brands” from 2001 through 2009 using the Fama-French method. Findings The authors’ index outperformed the Standard & Poor’s 500 when the market was up or downtrending, but not when it moved sideways. Research limitations/implications The authors find that an index of firms that own the produced better returns than the Standard & Poor’s 500 market index. Owning highly valued brands may be a marketplace signal to the investing community regarding the firm’s management acumen. Practical implications Owning high-value brands seems to influence share price performance, a metric used to judge chief executive officers. Thus, brand investments align with the shareholders’ interest. The authors help alleviate the perception (Challagalla et al., 2014) that marketing managers make investments on an ad hoc basis. Originality/value For the first time, the authors evaluate the effect of owning one or more of the world’s most valuable brands on the market value of common stock using data from downtrending, uptrending and no-trend periods. This research is also among the first to introduce volatility into the Fama-French method and it is an important explanatory variable. This paper’s approach has interesting comparisons to other papers taking a similar analytical approach.

Reflecting or ruminating: listening to the regrets of life science leaders

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Helen Mary Meldrum
Keyword(s):  
Chief Executive Officers ◽  
Life Science ◽  
Negative Emotion ◽  
Chief Executive ◽  
Positive Influence ◽  
Lessons Learned ◽  
Business Leaders ◽  
Content Type ◽  
The Usa ◽  
Executive Officers

PurposeThe overwhelming frequency of failure in trying to bring a safe and effective biotech, pharmaceutical or medical device product to market is truly astounding. This research synthesizes industry leaders' insights on lessons learned from reflecting on professional disappointments.Design/methodology/approachThis research used a qualitative approach to learning from the Chief Executive Officers (CEOs), Chief Scientific Officers (CSOs) and Chief Medical Officers (CMOs) of the most successful life science firms in the USA. A total of 45 industry leaders were interviewed regarding their lingering regrets about their career misadventures.FindingsRegrets were unavoidable because there were opportunity costs for every choice each leader made. Commentary about wisdom gained comprised themes regarding valuable time lost, strategies that could have been enacted, products that failed and essential personnel who were not managed optimally. Contrary to expectations, there was little mention of money that was squandered.Originality/valueNot felt as a solely negative emotion, regrets were recognized by these leaders as a potentially positive influence on their future decisions. Not felt as a solely negative emotion, regret was recognized by these leaders as a potentially positive influence on their future decisions. This exploratory study suggests that learning from retrospective and anticipated regrets benefits life science leaders in gaining clarity of thought regarding their current business challenges. Because prior research on the value of psychological regrets has mostly relied on limited samples, this inquiry contributes a new vantage point by examining a unique population of senior business leaders, thus providing broader applicability to the organizational literature.

CEO statements on racial inequity – (how) do they matter to shareholders?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pyemo Afego ◽  
Imhotep Alagidede
Keyword(s):  
Chief Executive Officers ◽  
Social Issues ◽  
Chief Executive ◽  
Future Research ◽  
Research Approach ◽  
Content Type ◽  
Racial Injustice ◽  
Communication Decisions ◽  
Executive Officers ◽  
The Impact

Purpose The purpose of this study is to explore how citizen protests against perceived acts of racial injustice impact on share prices of companies who weigh in on the protests. In particular, corporate statements that directly address the issues around the protests are identified and possible mechanisms underlying how these may impact shareholder value are discussed. Design/methodology/approach The authors first use a qualitative research approach of content and sentiment analysis to track how companies or their chief executive officers (CEOs) present their stance against racial injustice, as represented by their use of linguistic markers. Then, the authors use an event study methodology to assess the response from stock market participants. Findings The findings suggest that CEOs primarily convey their stance using language that is emotive and empathic. In addition, shareholders earn a significant abnormal return of 2.13%, on average, in the three days following the release of the statements. Research limitations/implications This study considered only US-listed companies. The sample size, also, is relatively small. Institutional and cultural differences across countries may also vary. Thus, future research could explore the extent to which the findings generalize to other contexts. Practical implications Results provide insights to top managers who communicate with various stakeholders on emotionally charged social issues. Findings also offer insights on the timing of trades for investors and arbitrageurs. Social implications Findings contribute to the understanding of corporate behaviour in times of social upheaval. Insights from the study may also be used to inform corporate communication decisions about important social issues. Originality/value This study brings into focus the role that affective appeal and moral emotion can play in evoking motivation for corporate activism, and the impact that this has on investor opinions’ formation process.

scholarly journals An empirical analysis of construction organisations’ competitive strategies and performance

2015 ◽  
Vol 5 (4) ◽  
pp. 417-431 ◽  
Author(s):  
Luqman Oyekunle Oyewobi ◽  
Abimbola Oluwakemi Windapo ◽  
Rotimi Olabode Bamidele James
Keyword(s):  
South Africa ◽  
Financial Performance ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Research Approach ◽  
Competitive Strategies ◽  
Content Type ◽  
Study Results ◽  
Financial Performance Measures ◽  
Executive Officers

Purpose – The essence of strategy formulation is to assist an organisation obtain a strategic fit with its environment and help enhance organisational continuous improvement in achieving performance excellence. The purpose of this paper is to investigate the type of competitive strategies used by construction organisations in attaining their strategic goals in South Africa. Design/methodology/approach – The study employs an inductive research approach using a well-structured questionnaire to elicit information from large construction organisations based in South Africa. Findings – The research identifies five strategic attributes that could assist organisations to grow their businesses and enhance their returns. It reveals that all Porters’ generic competitive strategies are significantly related to organisational financial performance measures except focus strategy. The research found that three generic competitive strategies are positively related to non-financial performance and that differentiation and cost-leadership strategies are capable of assisting organisations’ achieve their financial performance goals. Practical implications – The study results will be of immense benefit to chief executive officers as well as managers of construction organisations in growing their businesses and enhancing their corporate performance. Originality/value – The paper contributes both theoretically and empirically to the current discussion and findings on competitive strategy and its relationship with organisational performance. The results presented in the paper have important implications for the implementation of competitive strategies in construction companies and future studies in the area of strategic management.

The two sides of CEO pay injustice

2018 ◽  
Vol 16 (1) ◽  
pp. 3-30 ◽  
Author(s):  
Herman Aguinis ◽  
Geoffrey P. Martin ◽  
Luis R. Gomez-Mejia ◽  
Ernest H. O’Boyle ◽  
Harry Joo
Keyword(s):  
Normal Distribution ◽  
Power Law ◽  
Chief Executive Officers ◽  
Risk Sharing ◽  
Chief Executive ◽  
Return On Assets ◽  
Content Type ◽  
Ceo Pay ◽  
Executive Officers ◽  
Two Sides

Purpose The purpose of this study was to examine the extent to which chief executive officers (CEOs) deserve the pay they receive both in terms of over and underpayment. Design/methodology/approach Rather than using the traditional normal distribution view in which CEO performance clusters around the mean with relatively little variance, the authors adopt a novel power law approach. They studied 22 industries and N = 4,158 CEO-firm combinations for analyses based on Tobin’s Q and N = 5,091 for analyses based on return on assets. Regarding compensation, they measured the CEO distribution based on total compensation and three components of CEO total pay: salary, bonus, and value of options exercised. Findings In total, 86 percent of CEO performance and 91 percent of CEO pay distributions fit a power law better than a normal distribution, indicating that a minority of CEOs are producing top value for their firms (i.e. CEO performance) and a minority of CEOs are appropriating top value for themselves (i.e. CEO pay). But, the authors also found little overlap between CEOs who are the top performers and CEOs who are the top earners. Implications The findings shed new light on CEO pay deservingness by using a novel conceptual and methodological lens that highlights systematic over and underpayment. Results suggest a violation of distributive justice and offer little support for agency theory’s efficient contracting hypothesis, which have important implications for agency theory, equity theory, justice theory, and agent risk sharing and agent risk bearing theories. Practical implications Results highlight erroneous practices when trying to benchmark CEO pay based on average levels of performance in an industry because the typical approach to CEO compensation based on averages significantly underpays stars and overpays average performers. Originality/value Results offer new insights on the extent of over and underpayment. The findings uncover an extremely large non-overlap between the top earning and top performing CEOs and to an extent far greater in magnitude than previously suggested.

Legitimacy building of digital platforms in the informal economy: evidence from Indonesia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eko Heru Prasetyo
Keyword(s):  
Informal Economy ◽  
Chief Executive Officers ◽  
Business Models ◽  
Chief Executive ◽  
Sharing Economy ◽  
Bottom Of The Pyramid ◽  
Content Type ◽  
Digital Platforms ◽  
Executive Officers ◽  
Start Ups

Purpose This study aims to investigate how digital entrepreneurs develop platforms business models under an unregulated market and what approach they take to address informal economy (IE) activities. Design/methodology/approach The author used a qualitative method by interviewing sixteen respondents, including founders, Chief Executive Officers, and managers of digital-driven start-ups in Indonesia. I then analysed the interviews into several codes and themes for further discussion. Findings This study reveals distinctive approaches performed by startups within three-level institutions, namely, users, market and regulation. Each level represents digital entrepreneurs’ unique behaviour, which the author described as collective, narrative and compliant. Research limitations/implications This paper demonstrates that digital entrepreneurs leveraging informal sectors contribute to the process of formalisation. However, the author emphasise less on how it impacts informality and who receives incentives. Practical implications This study suggests appropriate strategies for entrepreneurs who build and develop a platform beyond immature setting and unveils different directions to comprehend their legitimacy building. Social implications This study also elucidates political implications such as how the dynamics between regulators’ response and entrepreneurs’ reaction shape the new regulative environment. An idea of self-regulate – entrepreneurs as actors instead of a subject of regulation – might be suitable to reflect how they overcome the bottom of the pyramid using technology innovation. Originality/value While previous studies focused primarily on sharing economy, this study provides a different array of discussion on the digitalisation of the informal economy in emerging markets.

Effects of CEO duality and tenure on innovation

2019 ◽  
Vol 12 (4) ◽  
pp. 536-552
Author(s):  
Mengge Li ◽  
Jinxin Yang
Keyword(s):  
Chief Executive Officers ◽  
Boards Of Directors ◽  
Chief Executive ◽  
Monitoring And Control ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Ceo Tenure ◽  
Executive Officers ◽  
Advance Theory ◽  
Exploratory Innovation

Purpose As the primary decision makers, chief executive officers (CEOs) play pivotal roles in firm innovation. However, little is known regarding how CEOs influence the exploitation and exploration paradox. To advance theory and research, the purpose of this paper is to investigate the joint effects of CEO tenure and CEO–chair duality on a firm’s shifting emphasis between exploitative and exploratory innovation. Design/methodology/approach This paper takes the approach of a longitudinal sample of 81 US pharmaceutical firms. Findings As CEOs’ tenure advance, their firms’ percentage of exploitative innovation increases. Furthermore, non-duality (separation of board chair and CEO) further strengthens the positive relationship between CEO tenure and the percentage of exploitative innovation. Research limitations/implications This study integrates upper echelons theory and behavioral agency theory to juxtapose the effects of CEOs on technological innovation. This study extends knowledge of strategic leadership and innovation by showing that CEOs influence the balance between exploitative and exploratory innovation. Furthermore, this study also contributes to the corporate governance literature by demonstrating that monitoring vigilance could inhibit capable CEOs from pursuing more exploratory innovation. Practical implications Boards of directors should allow CEOs to have greater discretion over innovation, and vigilant monitoring and control may force CEOs to focus less on exploration. Originality/value This is one of the few studies that explicitly investigate how CEO influences a firm’s emphasis on exploitative innovation and exploratory innovation.

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