Corporate risk: CEO overconfidence and incentive compensation

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tom Aabo ◽  
Nicholai Theodor Hvistendahl ◽  
Jacob Kring
Keyword(s):  
Design Methodology ◽  
Positive Association ◽  
Incentive Compensation ◽  
Practical Reasons ◽  
Content Type ◽  
Financial Firms ◽  
The Individual ◽  
Ceo Selection ◽  
Corporate Risk ◽  
Practical Implications

PurposeThe purpose of this study is to investigate the association between corporate risk and the interaction between CEO incentive compensation and CEO overconfidence.Design/methodology/approachThis empirical study performs random and fixed effect (FE) regression analysis. It uses option-implied measures of CEO overconfidence.FindingsThe authors contribute to the existing literature by showing (1) that the positive association between high CEO incentive compensation and corporate risk only exists in the sphere of overconfident CEOs and (2) that the positive association between overconfident CEOs and corporate risk only exists in the sphere of high CEO incentive compensation. The authors show that the combination of high CEO incentive compensation and CEO overconfidence is associated with an increase in corporate risk of approximately 6% while the individual effects are for all practical reasons negligible. The results imply that only the combination of high CEO incentive compensation and CEO overconfidence is associated with a significantly elevated level of corporate risk.Research limitations/implicationsThe findings are based on S&P 1500 non-financial firms in the period 2007–2016.Practical implicationsThe findings have important implications in terms of CEO selection and compensation.Originality/valueThis study provides empirical evidence on the importance of the dual presence of high CEO incentive compensation and CEO overconfidence for corporate risk. The previous literature has primarily investigated these phenomena in isolation.

The value of human capital within Canadian business schools

2018 ◽  
Vol 19 (4) ◽  
pp. 836-855 ◽  
Author(s):  
Ajantha Velayutham ◽  
Asheq Razaur Rahman
Keyword(s):  
Human Capital ◽  
Design Methodology ◽  
Positive Association ◽  
Content Type ◽  
Individual Level ◽  
Structural Capital ◽  
The Individual ◽  
Academic Salaries ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to empirically investigate whether an individual’s knowledge, skills and capabilities (human capital) are reflected in their compensation. Design/methodology/approach Data are drawn from university academics in the Province of Ontario, Canada, earning more than CAD$100,000 per annum. Data on academics human capital are drawn from Research Gate. The authors construct a regression analysis to examine the relationship between human capital and salary. Findings The analyses performed indicates a positive association between academic human capital and academic salaries. Research limitations/implications This study is limited in that it measures an academic’s human capital solely through their research outputs as opposed to also considering their teaching outputs. Continuing research needs to be conducted in different country contexts and using negative proxies of human capital. Practical implications This study will create awareness about the value of human capital and its contribution towards improving organisational structural capital. Social implications The study contributes to the literature on human capital in accounting and business by focussing on the economic relevance of individual level human capital. Originality/value The study contributes to the literature on human capital in accounting and business by focussing on the economic relevance of individual level human capital. It will help create awareness of the importance of valuing human capital at the individual level.

Unrestrained chief execs

2020 ◽  
Vol 36 (12) ◽  
pp. 33-34
Keyword(s):  
Case Studies ◽  
Design Methodology ◽  
Reading Time ◽  
Cutting Edge ◽  
Incentive Compensation ◽  
Content Type ◽  
Pertinent Information ◽  
Corporate Risk ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Overconfident CEOs are more likely to push organizations towards unacceptably high levels of corporate risk when given high incentive compensation. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Are the saving decision patterns of bank customers also clouded by psychological biases? Evidence from Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joseph Emmanuel Tetteh ◽  
Christopher Boachie
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Design Methodology ◽  
Weighted Least Squares ◽  
Least Squares Regression ◽  
Individual Decision ◽  
Content Type ◽  
Saving Decisions ◽  
The Individual ◽  
Practical Implications

PurposeThis paper attempts to investigate the influence of psychological biases on saving decision-making of bank customers in Ghana.Design/methodology/approachIt employs weighted least squares regression to test the effect of psychological biases on savings decisions of bank customers.FindingsThe findings show that all the nine psychological biases, namely mental accounting, availability, loss aversion, representativeness, anchoring, overconfidence, status quo, framing effect and disposition effect employed for the study have a significant influence on saving decision of bank customers. The results depict that psychological biases are entrenched in the saving pattern of bank customers in Ghana.Practical implicationsFor policy purposes, the study recommends that bank customers need to enhance their knowledge of psychological biases in order to improve their gains from savings, and not to fall prey to these prejudices. The satisfied customer is a dependable source of bank viability and survival.Originality/valueTo the best of the knowledge of the author, this study provides the first empirical evidence of the influence of psychological biases on saving decisions of bank customers in Ghana. The findings of this study will enhance knowledge on the influence of psychological biases on individual decision-making and will accentuate the fact that the individual is not an entirely rational being.

Frameworks for consumers’ narratives in a changing marketplace

2017 ◽  
Vol 35 (7) ◽  
pp. 892-906
Author(s):  
David A. Gilliam ◽  
Teresa Preston ◽  
John R. Hall
Keyword(s):  
Design Methodology ◽  
Ground Level ◽  
Retail Banking ◽  
Content Type ◽  
Cultural Narrative ◽  
Banking Activity ◽  
Consumer Surveys ◽  
The Individual ◽  
The Impact ◽  
Practical Implications

Purpose Narratives are central to consumers’ understanding of brands especially during change. The financial crisis that began in 2008 offered a changing marketplace from which to develop two managerially useful frameworks of consumer narratives. The paper aims to discuss these issues. Design/methodology/approach Consumer focus groups, interviews with bankers and qualitative consumer surveys were used to gather consumers’ narratives about retail banking. The narratives were examined through frameworks from both the humanities and psychology (narrative identity). Findings The individual consumer narratives were used to create first a possible cultural narrative or bird’s eye view and later archetypal narratives of groups of consumers for a ground-level view of the changing marketplace. Research limitations/implications Like all early research, the findings must be examined in other contexts to improve generalizability. Practical implications The narrative results revealed the impact of change on consumers’ identities, views of other entities and retail banking activity to yield managerially actionable information for segmentation, target marketing, branding and communication. Originality/value Frameworks are developed for consumer narratives which are shown to be useful tools in examining consumers’ reactions to changing markets and in formulating marketing responses.

Cultural traits influencing the adoption of new ways of workings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amitesh Singh Parihar ◽  
Vinita Sinha
Keyword(s):  
Design Methodology ◽  
Driving Forces ◽  
Manufacturing Industries ◽  
Survey Questionnaire ◽  
Content Type ◽  
New Ways Of Working ◽  
One Step ◽  
Cultural Traits ◽  
The Individual ◽  
Practical Implications

Purpose The purpose of this paper is to identify the strengths and areas of improvement for taking organizations one step ahead in terms of adopting digitalization, analytics and governance. Also, the paper aims to identify the organizational cultural traits that influence the adoption of digitization and technology, analytics and governance. Design/methodology/approach A quantitative analysis of survey questionnaire collected from working professionals of various manufacturing industries to find out the driving traits and the restraining traits and to propose which is dominating. Sector: manufacturing, sample: working professionals across functions and sample size: 80–100 people. Findings This research suggests the cultural traits that influence the adoption of digitization and technology, analytics and governance in any organization. Practical implications As organizations explore new ways of working, their organizational culture and employee perspective would play an important role in prioritizing the interventions. This research aims to suggest a strategy to strengthen the driving forces and/or weaken the restraining forces. Originality/value There are various papers available on the individual topics but the uniqueness of this paper is that it represents all three factors in a single research and their influencers.

Learning organization – organization emerging from presence

2019 ◽  
Vol 27 (1) ◽  
pp. 17-30
Author(s):  
Nataša Rupčić
Keyword(s):  
Learning Organization ◽  
Critical Review ◽  
Paradigm Shift ◽  
Design Methodology ◽  
Social Problems ◽  
Wicked Problems ◽  
Social Dimensions ◽  
Content Type ◽  
The Individual ◽  
Practical Implications

Purpose The purpose of this paper is to discuss the possibilities of transcending individual, organizational and social problems through the prism of presence as suggested by Senge et al. (2012). Design/methodology/approach The paper is based on the critical review of previous contributions. Findings The idea of a learning organization seems romantic and elusive, as well as difficult to implement, especially when the definition by Senge (1990) is considered. At the same time, organizational and social complexity is increasing and resulting in numerous difficult or wicked problems. To reach integrative and transcending solutions, a change in perception and surrender to presence is key. Research limitations/implications Conclusions provided in the paper could benefit from further practice to corroborate the findings. Practical implications Suggestions for practitioners have been provided on how to solve personal, organizational and social problems on the basis of the paradigm shift and the shift in perception. Originality/value In this paper, the individual, organizational and social dimensions in terms of their intricacies are considered and solutions are offered that could simultaneously solve wicked problems on all three levels.

scholarly journals The allure of celebrities: unpacking their polysemic consumer appeal

2019 ◽  
Vol 53 (10) ◽  
pp. 2025-2053
Author(s):  
Markus Wohlfeil ◽  
Anthony Patterson ◽  
Stephen J. Gould
Keyword(s):  
Design Methodology ◽  
Supporting Evidence ◽  
Human Beings ◽  
Total Period ◽  
Content Type ◽  
The Public ◽  
The Social ◽  
Social Link ◽  
The Individual ◽  
Practical Implications

Purpose This paper aims to explain a celebrity’s deep resonance with consumers by unpacking the individual constituents of a celebrity’s polysemic appeal. While celebrities are traditionally theorised as unidimensional semiotic receptacles of cultural meaning, the authors conceptualise them here instead as human beings/performers with a multi-constitutional, polysemic consumer appeal. Design/methodology/approach Supporting evidence is drawn from autoethnographic data collected over a total period of 25 months and structured through a hermeneutic analysis. Findings In rehumanising the celebrity, the study finds that each celebrity offers the individual consumer a unique and very personal parasocial appeal as the performer, the private person behind the public performer, the tangible manifestation of either through products and the social link to other consumers. The stronger these constituents, individually or symbiotically, appeal to the consumer’s personal desires, the more s/he feels emotionally attached to this particular celebrity. Research limitations/implications Although using autoethnography means that the breadth of collected data is limited, the depth of insight this approach garners sufficiently unpacks the polysemic appeal of celebrities to consumers. Practical implications The findings encourage talent agents, publicists and marketing managers to reconsider underlying assumptions in their talent management and/or celebrity endorsement practices. Originality/value While prior research on celebrity appeal has tended to enshrine celebrities in a “dehumanised” structuralist semiosis, which erases the very idea of individualised consumer meanings, this paper reveals the multi-constitutional polysemy of any particular celebrity’s personal appeal as a performer and human being to any particular consumer.

The impact of corporate governance code on earnings management in listed non-financial firms

2017 ◽  
Vol 7 (4) ◽  
pp. 428-444 ◽  
Author(s):  
Erick Rading Outa ◽  
Paul Eisenberg ◽  
Peterson K. Ozili
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Explanatory Variable ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
New Institutions ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya. Design/methodology/approach Using a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI). Findings The overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya. Practical implications Evidence of income decreasing\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG. Originality/value This study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

Learning film production

2014 ◽  
Vol 26 (5) ◽  
pp. 296-309 ◽  
Author(s):  
Leona Bunting ◽  
Margaretha Herrman ◽  
Marita Johanson
Keyword(s):  
Education System ◽  
Design Methodology ◽  
Formal Education ◽  
Film Industry ◽  
Intrinsic Value ◽  
Film Production ◽  
Structured Interviews ◽  
Content Type ◽  
The Individual ◽  
Practical Implications

Purpose – The purpose of this study is to contribute knowledge about learning linked to the film industry by investigating how film producers reason about learning for and in the profession. Design/methodology/approach – This study is based on semi-structured interviews with 20 film producers, both university and workplace trained (UWT) and workplace trained (WT). The content analysis is based on the transcribed dialogues. The study is empirical, explorative and qualitative. Findings – The interviewees consider networks to be of utmost importance for gaining entrance to and continuously finding work in the film industry. They also reason about required knowing and what learning practices are available. Although formal education is not advocated by all, it can hold intrinsic value for the individual. Traditions of learning are being scrutinized, and critical reflection is replacing naivety and emotionality. Practical implications – Different aims regarding learning in the formal education system and film industry result in a gap which needs to be bridged to challenge conserving and reproducing patterns of learning. Collaboration is suggested as a solution benefiting both the individual learner and the film industry. The resulting knowledge from this study can thus be used by the formal education system and the film industry when developing forms for collaboration surrounding learners of film production. Originality/value – The focus presented in this paper of learning in and for film production has been sparingly addressed in previous research.

Cooperation strategies for e-commerce platforms with seller classification

Kybernetes ◽  
2016 ◽  
Vol 45 (9) ◽  
pp. 1369-1386 ◽  
Author(s):  
Ya’nan Ji ◽  
Xiaoyan Xu ◽  
Yanhong Sun
Keyword(s):  
Service Quality ◽  
Design Methodology ◽  
Pricing Strategies ◽  
Performance Requirement ◽  
Content Type ◽  
Pricing Decisions ◽  
Different Types ◽  
The Individual ◽  
Practical Implications ◽  
Strategy I

Purpose The purpose of this paper is to study the cooperation and pricing strategies for e-commerce platforms when considering seller classification. Design/methodology/approach E-commerce platforms serve to facilitate trade and generate revenue from the participants. By classifying the sellers in the market into two types (the individual sellers vs the professional sellers), the authors examine how the interaction between the two types of sellers affects the platform’s cooperation and pricing decisions. Specifically, the authors compare two cooperation strategies for the platform: cooperating only with the professional sellers (strategy I); and cooperating with both the two types of sellers (strategy II). Findings When the platform attractiveness for the professional sellers is high enough, strategy II is absolutely beneficial than strategy I; whereas when the platform attractiveness for the professional sellers is low and the performance requirement of the individual sellers is relatively high, strategy I will be more beneficial. Practical implications For a platform choosing strategy II, it should make effort to differentiate between the different types of sellers by the product or service quality. Originality/value The paper is among the first to study the cooperation and pricing strategies for the e-commerce platform with seller classification.

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