scholarly journals REFLECTIONS OF CORPORATE GOVERNANCE ON PAY-PERFORMANCE SENSITIVITY: A NEW PERSPECTIVE

2022 ◽  
Vol 23 (1) ◽  
Author(s):  
THAYLA M. G. IGLESIAS ◽  
TAÍS D. SILVA ◽  
DUTERVAL JESUKA ◽  
FERNANDA M. PEIXOTO
Keyword(s):  
Corporate Governance ◽  
Executive Compensation ◽  
Securities And Exchange Commission ◽  
Board Composition ◽  
Random Effects Models ◽  
Performance Sensitivity ◽  
Corporate Governance Mechanisms ◽  
Panel Data Regression ◽  
New Perspective ◽  
And Control

ABSTRACT Purpose: This research investigates whether the characteristics of corporate governance (executive compensation, board composition, ownership structure, and control) influence the sensitivity of remuneration to firms’ performance, the so-called pay-performance sensitivity. Originality/value: This study brings to the literature a new perspective on the interaction of corporate governance mechanisms aligned with the concept of pay-performance sensitivity. The study shows that governance instruments are not isolated but rather interrelated and interdependent. Design/methodology/approach: The study sample was composed of Brazil 100 Index (IBRX 100) companies listed on B3 from 2014 to 2018. Data were extracted from the Economatica® database, and the reference forms were accessed on the Securities and Exchange Commission of Brazil’s (CVM) website. We use panel data regression models with fixed and random-effects models. Findings: The board composition (represented by the CEO/Chairman duality) increases the pay-performance sensitivity, while the ownership concentration reduces it. In addition, a greater presence of independent members on the board reduces the variation in executive compensation.

scholarly journals Corporate governance and conglomerate diversification strategy – evidence from Vietnam

2018 ◽  
Vol 13 (6) ◽  
pp. 1578-1596 ◽  
Author(s):  
Thi Xuan Trang Nguyen
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Composition ◽  
Governance Mechanisms ◽  
Content Type ◽  
Unrelated Diversification ◽  
Corporate Governance Mechanisms ◽  
Control Devices ◽  
Interest Alignment ◽  
The Relationship

Purpose The purpose of this paper is to examine the impact of internal corporate governance mechanisms, including interest alignment and control devices, on the unrelated diversification level in Vietnam. Additionally, the moderation of free cash flow (FCF) on these relationships is also tested. Design/methodology/approach The study is based on a balanced panel data set of 70 listed companies in both stock markets, Ho Chi Minh Stock Exchange and Hanoi Stock Exchange, in Vietnam for the years 2007–2014, which gives 560 observations in total. Findings The results show that if executive ownership for CEOs is increased, then the extent of diversification is likely to be reduced. However, the link between unrelated diversification level and executive stock option, another interest alignment device, cannot be confirmed. Among three control devices (level of blockholder ownership, board composition and separation of CEO and chairman positions), the study finds a positive connection between diversification and blockholder ownership, and statistically insignificant relations between the conglomerate diversification level and board composition, or CEO duality. Additionally, this study discovers a negative link between diversification and state ownership, although there is no evidence to support the change to the effect of each internal corporate governance mechanism on the diversification level of a firm between high and low FCF. Practical implications The research can be a useful reference not only for investors and managers but also for policy makers in Vietnam. This study explores the relationship among corporate governance, diversification and firm value in Vietnam, where the topics related to effectiveness of corporate governance mechanisms to public companies has been increasingly attractive to researchers since the default of Vietnam Shipbuilding Industry Group (Vinashin) happened in 2010 and the Circular No. 121/2012/TT-BTC on 26 July 2012 of the Vietnamese Ministry of Finance was issued with regulations on corporate governance applicable to listed firms in this country. Originality/value This research, first, enriches current literature on the relationship between corporate governance and firm diversification. It can be considered as a contribution to the related topic with an example of Vietnam, a developing country in Asia. Second, the research continues to prove non-unification in results showing the relationship between corporate governance and conglomerate diversification among different nations. Third, it provides a potential input for future research works on the moderation of FCF to the effects of corporate governance on diversification.

scholarly journals Downward wage rigidity in American technology firms

2018 ◽  
Vol 15 (4-1) ◽  
pp. 181-190
Author(s):  
Xiaoying Chen ◽  
Jasmine Yur-Austin
Keyword(s):  
Corporate Governance ◽  
Pay For Performance ◽  
Business Leaders ◽  
Wage Rigidity ◽  
Venture Capitalists ◽  
Technology Firms ◽  
Corporate Governance Mechanisms ◽  
And Control ◽  
Dot Com

This study reviews the role of various corporate governance mechanisms to pay for performance in American technology firms. Compared to traditional business leaders, CEOs in technology firms possess stronger power for negotiating with shareholders; such power theoretically lowers the chance of interest conflicts between management and control but may increase CEOs’ wage rigidity during business downturns, especially in firms with poor corporate governance. We evaluate ownership structure; board composition; and the existence of independent compensation committees throughout the dot-com bubble and bubble-burst periods. We aim to examine during the business downturn period whether these CEOs cut their compensation effectively or exercise their negotiation power to protect their own benefit. Our empirical results provide strong evidence that given poor firm performance, CEOs with weak corporate governance negotiate higher cash-based pay rather than reduce their compensations. However, we find that venture capitalists play an important role in monitoring CEOs and revising compensation.

scholarly journals Corporate governance, ownership and control: A review of recent scholarly research

2018 ◽  
Vol 14 (1) ◽  
pp. 50-56 ◽  
Author(s):  
Alex Kostyuk ◽  
Yaroslav Mozghovyi ◽  
Dmytro Govorun
Keyword(s):  
Corporate Governance ◽  
Corporate Ownership ◽  
Board Diversity ◽  
Existing Problems ◽  
The Past ◽  
Corporate Governance Mechanisms ◽  
Wide Range ◽  
Recent Trends ◽  
Performance Auditing ◽  
And Control

This manuscript is aimed at highlighting the most recent trends in corporate governance, ownership and control based on the manuscripts presented at the international conference “Corporate Governance, Ownership and Control” that took place in Rome on February 27, 2018. We have also used reputable papers published in the relevant academic journals in the past to support the arguments stated by the authors of the papers, presented at the conference. This paper covers a wide range of corporate governance topics in corporate ownership and control toward corporate governance mechanisms, such as board of directors, the board diversity, directors’ remuneration, firm performance, auditing and accounting, etc. We saw a growing interest of researchers to widen the scope of their major research to link it to corporate ownership and control issues. Currently, corporate governance research follows two major routs: classical empirical corporate governance research and multidisciplinary research aimed at findings non-conventional methods to solution of existing problems.

The Effects of Corporate Governance on CEO Compensation

2019 ◽  
Vol 27 (2) ◽  
pp. 165-191
Author(s):  
Myoung Gi Lee ◽  
Jin San Kim
Keyword(s):  
Corporate Governance ◽  
Executive Compensation ◽  
Internal Control ◽  
Labor Union ◽  
Market Competition ◽  
Poor Performance ◽  
Control Mechanisms ◽  
Governance Mechanisms ◽  
Top Executives ◽  
Corporate Governance Mechanisms

The purpose of this study is to find the effects of corporate governance on executive compensation using the sample of Korean manufacturing firms listed on the Korea Exchange (KRX) from 2005 to 2012. In order to do that, this study extends empirical models of Core et al. (1999), Fahlenbrach (2009), Giroud and Mueller (2011), and finds the following results. First, internal corporate governance negatively affects executive compensation, implying that a good corporate governance can prevent outrageous compensation to top executives with poor performance. On the other hand, the interactions between internal and external corporate governance mechanisms have mixed results. While the first interaction has little impact on executive compensation, the second interaction among three different mechanisms has a positive and statistically significant impact. These results imply that while internal corporate governance and product market competition works against executive compensation, labor union may be in the same boat with managers in terms of compensation. Unlike most previous studies based on one-dimensional approach, this study investigates interactions among various corporate governance mechanisms. Overall results have a few important economic and social implications. Because internal corporate governance works as an effective mechanism, policymakers should find ways to make internal control mechanisms as independent as possible.

scholarly journals Campaign finance and corporate governance: The case of Brazil

2006 ◽  
Vol 3 (2) ◽  
pp. 125-136
Author(s):  
Andre Carvalhal da Silva ◽  
Flavia Mourao Graminho
Keyword(s):  
Corporate Governance ◽  
Campaign Finance ◽  
Political Influence ◽  
Political Campaigns ◽  
Political Contributions ◽  
Firm Level ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
Ownership Rights ◽  
And Control

Corporate governance mechanisms, such as transparency, accounting standards, responsibility, accountability, fairness, business ethics, efficient shareholder controls, and ownership rights are key tools in combating corruption. This paper investigates on a firm-level basis the relation between corporate governance practices and campaign finance in Brazil. We interpret campaign finance as a proxy for political influence by interest groups. Our results indicate that family-owned firms contribute significantly more for political campaigns, both in terms of proportion of firms and total amount spent to finance the candidates. Higher concentration of capital and the separation of ownership and control are positively related to campaign donations, while better corporate governance is negatively related to political contributions.

scholarly journals The effect of corporate governance on bank financial performance: evidence from the Arabian Peninsula

2014 ◽  
Vol 11 (2) ◽  
pp. 178-191 ◽  
Author(s):  
Mohamed A. Basuony ◽  
Ehab K. A. Mohamed ◽  
Ahmed M Al-Baidhani
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Audit Committee ◽  
Arabian Peninsula ◽  
Outside Directors ◽  
Governance Mechanisms ◽  
Bank Profitability ◽  
Corporate Governance Mechanisms ◽  
And Control

This paper investigates the effect of internal corporate governance mechanisms and control variables, such as bank size and bank age on bank financial performance. The sample of this study comprises of both conventional and Islamic banks operating in the seven Arabian Peninsula countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, and Yemen. Regression analysis (OLS) is used to test the effect of corporate governance mechanisms on bank financial performance. The results of this study reveal that there is a significant relationship between corporate governance and bank profitability. Board size, board activism, number of outside directors, and bank age significantly affect Tobin’s Q. Meanwhile, ROA and PM are affected by ownership concentration, audit committee, audit committee meetings, and the age & size of the bank. The results are consistent with previous literature that the correlation between corporate governance and firm performance is still not clearly established and that impact of corporate governance on bank financial performance in developing countries is still relatively limited.

scholarly journals The use of corporate derivatives: Effects on firm value in the Italian market

2021 ◽  
Vol 19 (1) ◽  
pp. 55-68
Author(s):  
Alberto Tron ◽  
Federico Colantoni
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Control Variable ◽  
Governance Mechanisms ◽  
Financial Firms ◽  
Corporate Governance Mechanisms ◽  
Italian Market ◽  
Effect Regression ◽  
And Control ◽  
The Impact

It is an empirical question whether the use of derivatives hedging among firms actually contributes to enhancing firm performances. Despite the increasing use of derivatives by non-financial firms, existing literature still debates about their effect, especially in countries with peculiar corporate governance mechanisms. By using a sample of non-financial Italian firms listed from 2007 to 2018, this paper investigates if the use of several types (currency, interest rate, and commodity) of financial derivatives can affect the value of a company. For measuring the impact of the derivatives and in order to address any possible endogeneity problem, besides using the conventional methodologies applied by previous literature (fixed-effect regression models and system GMM estimators), we run a random forest model, a machine learning technique not yet applied before in this field, and calculate the relative importance of each independent and control variable. Differently from other European countries, findings show that the use of derivatives does not affect the firm value in the Italian market. Therefore, our results confirm the role of corporate governance mechanisms on the relationship between firm value and the use of derivatives and that their impact is country-specific.

DO OWNERSHIP CONCENTRATION AND THE BOARD OF DIRECTORS AFFECT EXPORTS?

2021 ◽  
Vol 22 (3) ◽  
Author(s):  
VITOR F. M. B. DIAS ◽  
MICHELE A. CUNHA ◽  
FERNANDA M. PEIXOTO ◽  
DUTERVAL JESUKA
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Optimal Level ◽  
Board Composition ◽  
Exporting Firms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Dependent Variables ◽  
Governance Practices ◽  
The Board Of Directors

ABSTRACT Purpose: To investigate whether the shareholder concentration and the board composition influence the export of Brazilian listed firms from 2010 to 2017. Originality/value: The study contributes to the literature on exports and corporate governance by highlighting that companies with good governance practices, measured by the board composition and ownership/control structure, might increase their exports. This research can serve as a guide for companies to structure their boards in order to positively influence exports and improve performance. In addition, the study raises the question of what would be the “optimal level” of firms’ shareholding concentration in order to improve the decision-making process involved in choosing to expand borders through export. Design/methodology/approach: The study performed logistic regression (logit model) and regression with the censored dependent variable (tobit model). Propensity to export and intensity of export were used as dependent variables. The logit regressions involved a sample of 307 exporting and non-exporting companies, and the tobit regressions involved a sample of 61 exporting firms. Findings: We found a positive relationship between board independence and exports, that is, the greater presence of independent members on the board, the higher the export level of firms. We also found that there is a non-monotonic relationship between shareholder concentration and level of exports. In summary, the study suggests that some corporate governance mechanisms may act as antecedents for firms’ export practices.

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