scholarly journals Who wins the tug of war? A comparative study of the influence of board power and CEO power on CEO-TMT pay gap

2021 ◽  
Vol 19 (1, special issue) ◽  
pp. 241-256
Author(s):  
Zhonghui Wang ◽  
Zonghui Li
Keyword(s):  
Agency Theory ◽  
Opposite Effect ◽  
Ceo Power ◽  
Negative Effects ◽  
Dynamic Panel ◽  
Pay Gap ◽  
Tournament Theory ◽  
Managerial Power ◽  
Theoretical Predictions ◽  
Theoretical Analyses

Extant studies theoretically debate and empirically present inconsistent findings of the factors that influence the CEO-TMT pay gap. In this study, we extend the research of the antecedents of the CEO-TMT pay gap by directly comparing different theoretical predictions regarding the impacts of board power and CEO power on the CEO-TMT pay gap. Conducting dynamic panel analyses with GMM estimator on a sample of 2,117 firm-year observations in the S&P 500 between 2006 and 2013, we empirically test the contrasting predictions regarding the relationships among board power, CEO power, board-CEO power imbalance, and the CEO-TMT pay gap. In turn, we find that board power is negatively associated with the CEO-TMT pay gap and CEO power has the opposite effect. Moreover, the stronger board power against CEO power, the smaller the CEO-TMT pay gap becomes. Our theoretical analyses and empirical investigations contribute to the existing theoretical debate among agency theory, tournament theory, and managerial power theory regarding the determinants of the CEO-TMT pay gap. Consistent with agency theory predictions rather than tournament theory ones, our empirical results suggest that boards are conscientious about the potential negative effects of a larger CEO-TMT pay gap and therefore stronger boards usually do not rely on larger CEO-TMT pay gap to incentivize CEOs. This study also contributes to corporate governance literature by offering new aggregated proxies for board power and CEO power which reflect the multidimensional features of board-CEO relationships

scholarly journals Towards a Multi-theoretical Approach on the Board and Firm Performance Relationship

2020 ◽  
Vol 36 (2) ◽  
Author(s):  
Nguyen Thu Thuy Tien
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Theoretical Approach ◽  
Resource Dependence ◽  
Integrated Approach ◽  
Resource Dependence Theory ◽  
Limited Range ◽  
Ceo Power ◽  
Managerial Power ◽  
Dependence Theory

Recent reviews of research on company boards and firm performance relationship tend to criticise three of the main traditional theories on boards, namely Agency Theory (AT), Resource Dependence Theory (RDT), and Managerial Power Theory (MPT) for their narrow assumptions and focuses on a limited range of board tasks. This study provides a critical review on these above theories and promotes a direction towards an integrated approach with three important governance factors, namely board capability, board incentives, and CEO power for a better understanding of board-firm performance relationship.

Managerial power theory, tournament theory, and executive pay in China

2011 ◽  
Vol 17 (4) ◽  
pp. 1176-1199 ◽  
Author(s):  
Jing Chen ◽  
Mahmoud Ezzamel ◽  
Ziming Cai
Keyword(s):  
Executive Pay ◽  
Power Theory ◽  
Tournament Theory ◽  
Managerial Power

scholarly journals Energy Use and Labor Productivity in Ethiopia: The Case of the Manufacturing Industry

Energies ◽  
2020 ◽  
Vol 13 (11) ◽  
pp. 2714 ◽  
Author(s):  
Selamawit G. Kebede ◽  
Almas Heshmati
Keyword(s):  
Panel Data ◽  
Labor Productivity ◽  
Alternative Model ◽  
Manufacturing Industry ◽  
Energy Use ◽  
Manufacturing Industries ◽  
Dynamic Panel ◽  
Control Variables ◽  
Theoretical Predictions ◽  
Dynamic Panel Estimator

This study investigates the effect of energy use on labor productivity in the Ethiopian manufacturing industry. It uses panel data for the manufacturing industry groups to estimate the coefficients using the dynamic panel estimator. The study’s results confirm that energy use increases manufacturing labor productivity. The coefficients for the control variables are in keeping with theoretical predictions. Capital positively augments productivity in the industries. Based on our results, technology induces manufacturing’s labor productivity. Likewise, more labor employment induces labor productivity due to the dominance of labor-intensive manufacturing industries in Ethiopia. Alternative model specifications provide evidence of a robust link between energy and labor productivity in the Ethiopian manufacturing industry. Our results imply that there needs to be more focus on the efficient use of energy, labor, capital, and technology to increase the manufacturing industry’s labor productivity and to overcome the premature deindustrialization patterns being seen in Ethiopia.

STATE OWNERSHIP, CORPORATE TOURNAMENT AND EXECUTIVE COMPENSATION: EVIDENCE FROM PUBLIC LISTED FIRMS IN CHINA

2011 ◽  
Vol 56 (03) ◽  
pp. 307-326 ◽  
Author(s):  
DONGWEI SU
Keyword(s):  
Executive Compensation ◽  
Transition Economy ◽  
Business Environment ◽  
State Ownership ◽  
Pay Gap ◽  
Listed Firms ◽  
Tournament Theory ◽  
Corporate Hierarchy ◽  
Pay Dispersion ◽  
Second Tier

This article tests several predictions of tournament theory on executive compensation in the context of a transition economy. Using an unbalanced panel of 34,701 executives in 1,386 public listed firms in China during 1999 and 2006, the paper finds that (1) pay increases as executives move up the corporate hierarchy into higher ranks; (2) pay gap is the largest between the first- and second-tier executives; (3) pay dispersion increases with the number of tournament participants and the risk of the business environment; (4) state ownership of shares reduces pay, pay gap and the sensitivities of the contestant pool and business risk to pay dispersion; (5) board composition and independence, CEO duality and the independence of the supervisory committee all affect pay and pay dispersion. Overall, this paper shows that listed firms in China, as they become more and more market-oriented, have adopted a pay structure that is largely consistent with the predictions of tournament theory, and that it is important to consider both state ownership and corporate governance in analyzing executive compensation structure.

scholarly journals Effects of International Exposure on Corporate Social Responsibility of the Chinese Corporate Sector: The Moderating Role of CEO Duality

2021 ◽  
Author(s):  
◽  
Radhika Ravi
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Agency Theory ◽  
Home Country ◽  
Negative Effects ◽  
Corporate Sector ◽  
Ceo Duality ◽  
Corporate Social ◽  
Moderating Role

<p>International exposure of a firm into new environments is one of the most important paths to firm growth. It provides growth opportunities and learning, and poses challenges of managing uncertainties of the new institutional environment, and demands of diverse domestic and international stakeholders. Despite the abundance of research on the effects of international exposure of a firm on its performance, the effects on corporate social responsibility (CSR) are not well understood. In addition to examining the direct effects of the international exposure of a firm on CSR activities in the home country, this study also examines the moderating role of Chief Executive Officer (CEO) duality in the association between international exposure of a firm and CSR activities in the home country.  Drawing from institutional theory and agency theory, this study argues that international exposure of a firm leads to a decrease in CSR activities in the home country. It further posits that CEO duality also negatively affects CSR activities in the home country. Further, the proposed moderation hypotheses argue that the negative effects of international exposure of a firm on CSR activities in the home country are stronger for firms with CEO duality as compared to non-duality. The proposed hypotheses are tested with data from 240 publicly listed Chinese firms between 2008 and 2016, consisting of 1920 firm-years. The panel data is analysed using Linear Mixed Modelling (LMM) with the SPSS software. The findings support all the proposed hypotheses.  This study makes three key contributions. Firstly, the study uses the institutional theory and agency theory to provide evidence for the negative effects of international exposure of a firm and CEO duality on CSR activities in the home country. Secondly, it enhances the understanding of how CEO duality acts as a boundary condition between international exposure of a firm and CSR relationships. Thirdly, it contributes to the emerging economy multinational enterprises literature by enhancing understanding of the proposed relationships in the context of the Chinese corporate sector.</p>

scholarly journals Does CEO power matter for the performance of retrenchment strategy?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rayenda Khresna Brahmana ◽  
Hui Wei You ◽  
Maria Kontesa
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Ceo Power ◽  
Resource Based View ◽  
Content Type ◽  
Emerging Country ◽  
The Relationship ◽  
Circulation Theory ◽  
Moderating Role

PurposeThis research aims to examine the moderating role of CEO power on the relationship between retrenchment strategy and firm performance by framing the relationship under an agency theory, and power circulation theory.Design/methodology/approachThis study focuses on a sample of 319 non-financial public listed companies in Malaysia from the year 2011–2016 and estimates the model under two-step GMM panel regression to eliminate the endogeneity issue.FindingsThe results show that the retrenchment strategy increased firm performance. Meanwhile, greater CEO power changes that retrenchment effect into increased performance. This study also indicates the CEO power strengthens the relationship between firm performance and retrenchment. However, CEO power does not have any effect on the performance of low retrenchment, and the performance of big firm size.Research limitations/implicationsThe findings show that the higher CEO power cause higher firm performance and higher retrenchment. This research suggests that CEO power can make retrenchment strategy works and the decision made can affect the firm performance significantly.Originality/valueThis study examines the effect of CEO power on the performance of retrenchment strategy implementation by contesting agency theory, power circulation theory, and resource-based view theory within the emerging country context.

scholarly journals Data of CEO power, chair-CEO age dissimilarity and pay gap of Chinese listed firms

Data in Brief ◽  
2020 ◽  
Vol 32 ◽  
pp. 106158
Author(s):  
Jiajun ZHU ◽  
Jing GAO ◽  
Hongping TAN
Keyword(s):  
Ceo Power ◽  
Pay Gap ◽  
Listed Firms ◽  
Ceo Age

CEO Power and Top Management Team Tenure Diversity: Implications for Firm Performance

2018 ◽  
Vol 26 (2) ◽  
pp. 256-272 ◽  
Author(s):  
Tomohiko Tanikawa ◽  
Yuhee Jung
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Significant Role ◽  
Performance Feedback ◽  
Interactive Effect ◽  
Top Management Team ◽  
Management Team ◽  
Top Management ◽  
Ceo Power ◽  
Japanese Firms

Using agency theory, we explore how the CEO (as principal) and the top management team (TMT) members (as agents) interactively influence the performance of a firm. By adding performance feedback theory into agency relations, we investigate whether the interactive effect of CEO–TMT relations on firm performance differs when past firm performance is either poor or strong. Using a sample of 115 Japanese firms, our results show that the interactive effect of CEO power and TMT tenure diversity on firm performance is positive in a situation of poor past firm performance. However, in a situation of strong past firm performance, the opposite result is found. These findings imply that CEO power might play a significant role in enhancing the effectiveness of TMT diversity on firm performance when past firm performance is poor.

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