scholarly journals Do Overconfident CEOs Pay More to Shareholders? Evidence from the US Market

2019 ◽  
Vol 13 (2) ◽  
pp. 25-35
Author(s):  
Artem Anilov
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Specific Area ◽  
Payout Policy ◽  
Negative Effects ◽  
Apparent Contradiction ◽  
Corporate Governance Mechanisms ◽  
The Us ◽  
Using Data ◽  
Corporate Governance Quality

This paper aims to discover evidence on the possible impact of CEO overconfidence on payout policy, and the role ofcorporate boards in offsetting the possible negative effects of this overconfidence. Our investigation demonstrates theeffect of overconfidence on the choice of payout method, specifically regarding the repurchases-dividends mix. Wealso evaluate the ability of corporate governance mechanisms to reduce or even eliminate the negative effects of CEObehavior on payout decisions.This study is conducted using a sample of 671 non-financial companies from the US for the period of 2007–2016. Weapply probit regressions to study different aspects of payout decisions, and use a panel GMM estimator to check forpossible endogenous effects. Using a corporate governance quality index, we test the ability of boards of directors toreduce negative effects of CEO’s overconfidence on the payout decisions.Our findings confirm the hypothesis that overconfident CEOs tend to increase the levels of payout in the form ofrepurchases, while the levels of cash dividends are unaffected by this type of CEO behavior. Moreover, an overconfidentCEO is more likely to initiate repurchases if this has not been done already. The results further illustrate thatoverconfident CEOs not only pursue higher levels of repurchases, but also switch more often from cash dividends torepurchases. However, it is also shown, in contract to previous research in the field, that efficient boards of directors havevery limited power in eliminating the negative effects of CEO overconfidence.This paper contributes to the existing literature by analyzing the specific area of CEO overconfidence using data fromthe United States, and follows specific lines of inquiry which have not been deeply studied. Further possibilities toexplore the implications of this research exists particularly in the consideration of its apparent contradiction of previousresearch. There is yet scope to determine applicable tools of reducing the negative effects of specific CEO behaviors. It ispossible to identify and investigate other relevant behavioral characteristics that may influence payout decisions. Further,these characteristics may be evaluated to see if the operation of these interrelations reproduce alternative results in termsof the effect of corporate governance, both in the US and in other markets.

scholarly journals Urban Accounting and Welfare

2013 ◽  
Vol 103 (6) ◽  
pp. 2296-2327 ◽  
Author(s):  
Klaus Desmet ◽  
Esteban Rossi-Hansberg
Keyword(s):  
Large Population ◽  
The United States ◽  
Welfare Effects ◽  
City Size ◽  
Negative Effects ◽  
The Us ◽  
City Size Distribution ◽  
Using Data ◽  
Main Components ◽  
The City

We use a simple theory of a system of cities to decompose the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities but also to greater frictions through congestion and other negative effects of agglomeration. Using data on MSAs in the United States, we estimate these city characteristics. Eliminating variation in any of them leads to large population reallocations, but modest welfare effects. We apply the same methodology to Chinese cities and find welfare effects that are many times larger than those in the US. (JEL H71, O18, P25, R11, R23, R41)

scholarly journals Executive board members’ remuneration: A longitudinal study

2009 ◽  
Vol 6 (3) ◽  
pp. 97-103 ◽  
Author(s):  
Themistokles Lazarides ◽  
Evaggelos Drimpetas ◽  
Dimitrios N. Koufopoulos
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Board Members ◽  
Anglo Saxon ◽  
Executive Board ◽  
Financial Measures ◽  
Corporate Governance Mechanisms ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
Measures Of Performance

Remuneration is considered to be closely connected with financial performance (positively), firm size (positively), the organizational structure (negatively) and corporate governance mechanisms (negatively). Furthermore, a connection of ownership structure and executives’ remuneration has been well established (theoretically and empirically) in the literature (agency theory). The paper examines if these relationships are valid in Greece. Greece hasn’t the characteristics of an Anglo-Saxon country. Overall the study has shown that remuneration levels in Greece are defined by a different set of factors than the ones that are prominent in an Aglo-Saxon country. Notably, fundamental financial measures of performance are more widely used. The age of firms and corporate governance quality have a catalytic impact on remuneration levels.

Life in the Middle

2021 ◽  
Author(s):  
Neilan S. Chaturvedi
Keyword(s):  
Legislative Behavior ◽  
Negative Effects ◽  
Party Leaders ◽  
Legislative Power ◽  
Partisan Polarization ◽  
Congressional Record ◽  
The Us ◽  
Using Data ◽  
Us Senate ◽  
Two Sides

For almost thirty years, political scientists have believed that the US Senate would be less affected by partisan polarization due to the existence of a handful of moderate senators who would act as power brokers between the two sides, yet year after year we see partisan gridlock. Life in the Middle argues that the belief in the powerful, pivotal moderate neglects their electoral circumstances and overestimates their legislative power. Indeed, not all senators are elected under equal circumstances where the modern centrist has to balance between two conflicting constituencies like Susan Collins in Maine, or represents a state where the opposition outnumbers their base like Joe Manchin in West Virginia. Using data compiled from the Congressional Record, the book examines the legislative behavior of moderates and finds that they seldom amend legislation to their preferences, rarely speak on the record, and often lose on final votes. Using unique interview data with nineteen legislative directors and six retired centrist senators, it also finds that the behind-the-scenes conversations mirror the on-stage behavior where centrists are not influential or viewed as pivotal by party leaders. Furthermore, moderates reported less satisfaction with legislative outcomes than their peers. Life in the Middle suggests that lawmaking needs to be re-evaluated as being much more variable and less reliant on the work of moderates and more on party leaders. Indeed, the mainstream concerns about polarization and its negative effects of increased gridlock and ideological legislation may be true.

The impact of external and internal corporate governance mechanisms on agency costs

2019 ◽  
Vol 19 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Jonas Schäuble
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Governance Mechanisms ◽  
Content Type ◽  
Frontier Analysis ◽  
Audit Firm ◽  
Audit Market ◽  
Corporate Governance Mechanisms ◽  
The Us ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of external and internal corporate governance mechanisms on agency costs. Design/methodology/approach The author uses data from German firms that were listed in the regulated market of the Frankfurt Stock exchange during 2006-2011. Agency costs were measured using stochastic frontier analysis, a relatively new approach to estimate agency costs. The regression analysis is applied to test the model. Findings The results indicate that an industry specialized audit firm, the presence of a large audit firm, abnormal audit fees, management ownership and variable management compensation are significantly negatively associated with the level of a firms’ agency costs. In contrast, this seems not to be true for the existence of an audit committee for which the results of the paper document a non-significant association. Originality/value The paper contributes to the existing literature in several ways. First, the research design is to the best of the authors’ knowledge the first that investigates the influence of different corporate governance mechanisms on the level of agency costs. Second, previous studies are mainly focused on the US audit market. This focus on the US audit market leaves uncertainties regarding the direction and magnitude of the empirical relationship in the European and German environmental context. Finally, the paper provides initial empirical evidence for a sample of German IFRS listed companies (IFRS – International Financial Reporting Standards).

scholarly journals The impact of corporate governance mechanisms and IFRS on earning management in Saudi Arabia

Accounting ◽  
2021 ◽  
pp. 207-224
Author(s):  
Abdulwahid A. Hashed ◽  
Faozi A. Almaqtari
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Earning Management ◽  
Negative Effects ◽  
Corporate Governance Mechanisms ◽  
Positive Effect

The current research seeks to assess the influence of corporate governance mechanisms and IFRS adoption on compliance with IFRS, earning management, and financial reporting quality(FRQ). A sample comprises 102 Saudi listed firms for the period spanning from 2014 up to 2019 was used. The study used descriptive statistics, correlation analysis and multivariate analysis to estimate the results. The results reveal that while board size, board meeting and foreign ownership had negative effects on compliance with IFRS, board and audit committee independence exhibited a positive effect. Further, the results demonstrate that there was a sign of earning management under IFRS when a performance magnitude was used. The results also indicate that board and audit committee size, audit committee meeting and managerial ownership had significant negative effects on financial reporting quality however, board and audit committee independence showed a significant positive effect. Importantly, the results found that FRQ under IFRS was better than Saudi GAAP. The present research provides practical implications for policy makers, stock market authority, and academicians. More regulatory and disclosure requirements have to be imposed and financial reporting supervisory board need to be formed. The present research provides a novel contribution to IFRS compliance, earning management, financial reporting quality and corporate governance literature. It has a unique contribution as it attempts to investigate this issue in the context of an emerging economy and a recent IFRS adopter; Saudi Arabia that has special country-specific characteristics. The study also provides an evidence by investigating earning management and financial reporting quality under both sets of accounting standards; IFRS and Saudi GAAP.

scholarly journals Do Large European Banks Benefit from Sound Corporate Governance in Good and Bad Times?

2017 ◽  
Vol 10 (4) ◽  
pp. 28-42
Author(s):  
Anastasia Stepanova ◽  
Olga Ivantsova
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Emerging Markets ◽  
Boards Of Directors ◽  
Research University ◽  
Panel Data Analysis ◽  
Statistical Tool ◽  
Corporate Governance Mechanisms ◽  
The 2008 Financial Crisis ◽  
E Mail

Anastasia N. Stepanova - National Research University The Higher School of Economics E-mail: [email protected] Ivantsova Olga Mikhailovna - expert: Faculty of Economics, Research and Training Laboratory of Corporate Finance, HSE. E-mail: [email protected] This paper aims to investigate the effect that internal corporate governance mechanisms have on the performance of commercial banks, how it differs for developed and emerging European markets, and whether it has changed as a result of the financial crisis. The key statistical tool used in the paper is the panel data analysis of the sample of 150 banks from 27 countries, over the period 2004-2011. We document the evidence partially supporting the effectiveness of smaller boards of directors, while the board independence seems to be negatively associated with the strategic performance of banks, especially in emerging markets and in times of a crisis. In emerging markets, state-owned banks appear to be more market-efficient, while high ownership concentration is considered by market players to be a negative signal. Studying the 2008 financial crisis period provides the evidence for structural movements in nonfinancial performance drivers.

scholarly journals A Thematic Review on Composition of Board of Directors (BOD) and Its Impact on Performance

NCC Journal ◽  
2018 ◽  
Vol 3 (1) ◽  
pp. 65-70
Author(s):  
Dipti Dhungel
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Corporate Boards ◽  
Corporate Governance Mechanisms ◽  
Thematic Review ◽  
And Performance ◽  
Main Component ◽  
The Relationship

This thematic paper has been prepared to find out how the composition of Board of Directors makes impact on performance of firms. To find this impact, the articles published in international journals have been reviewed. In addition to this detailed study of the legislator, the provision regarding composition of BOD in Nepal was made as stated in BAFIA and Company Act. The Board of Directorsis the elected members among the shareholders who could best represent the interest of each and every member. Corporate boards are one of the, if not the most important, internal corporate governance mechanisms that monitor and advise management in fulfilling the mandate to protect shareholder interests.There is still much debate as to the relationship between firm performance and boards of directors, which are arguably the main component of corporate governance.The thematic review concludes that the relationship between BOD and performance was not found on the basis of existing literature reviewed. Thus, the study opened the ground for the researcher to test this empirically.NCC JournalVol. 3, No. 1, 2018, Page: 65-70

scholarly journals Corporate governance and efficiency in the Electricity Sector using Data Envelopment Analysis: a study in the brazilian stock market

2011 ◽  
pp. 161-189
Author(s):  
Fernanda Maciel Peixoto ◽  
Roberto do Nascimento Ferreira ◽  
Ana Lúcia Miranda Lopes ◽  
André Francisco Alcântara Fagundes
Keyword(s):  
Corporate Governance ◽  
Data Envelopment Analysis ◽  
Cash Flow ◽  
Electricity Sector ◽  
Data Envelopment ◽  
Governance Mechanisms ◽  
Minority Shareholders ◽  
Corporate Governance Mechanisms ◽  
Business Efficiency ◽  
Using Data

Different Corporate Governance mechanisms have been suggested to minimize agency problems between managers and shareholders, and between controlling and minority shareholders. The aim of this study is to analyze the corporate governance mechanisms result in greater efficiency for Brazilian stock companies in the electricity sector, in 2007-2009. The hypothesis to be verified is that the lower the voting concentration   and the dependence of the council, and the greater the cash flow concentration, the greater the performance of the company will be. The analyzed sample involved thirty-three companies, fourteen being classified into one of the levels of CG (Level 1, Level 2 or New Market) and the remainder being members of the traditional market. To measure the efficiency of the companies, the non-parametric DEA (Data Envelopment Analysis) method was used, and to relate the efficiency with the governance variables, we adopted regression analysis of panel data. The results demonstrated that the use of CG mechanisms positively influences business efficiency, but not in the expected magnitude. It was found that the cash flow concentration is positively related to the efficiency of firms, supporting the governance literature. For future work, the use of other input and output variables is suggested.

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