scholarly journals Effective bonus?

2011 ◽  
Vol 9 (1) ◽  
pp. 211-220
Author(s):  
Gloria Y. Tian ◽  
Fan Yang
Keyword(s):  
Firm Performance ◽  
Value Creation ◽  
Shareholder Value ◽  
Firm Risk ◽  
Short Term ◽  
Ceo Bonuses

Is it economically meaningful and ethical for firms to pay their CEOs cash bonuses in thousands, if not millions, of dollars? This paper empirically addresses two aspects of this issue. First, we document that a bonus is only statistically, but not economically, sensitive to short‐term firm performance and shareholder value creation. In addition, a discretionary bonus, on average representing 12% of a CEO’s annual compensation, adds little value to shareholders. Second, we find that firms with increased CEO bonuses have a higher likelihood of engaging in takeover activities, although such takeovers do not necessarily result in greater firm risk.

scholarly journals Optimal Contracting of Pension Incentive: Evidence of Currency Risk Management in Multinational Companies

2020 ◽  
Vol 13 (2) ◽  
pp. 24
Author(s):  
Jeffrey (Jun) Chen ◽  
Yun Guan ◽  
Ivy Tang
Keyword(s):  
Risk Management ◽  
Value Creation ◽  
Shareholder Value ◽  
Risk Preference ◽  
Multinational Companies ◽  
Firm Risk ◽  
Currency Hedging ◽  
Hedging Strategies ◽  
Managerial Risk ◽  
Optimal Contracting

Using a large sample of multinational companies (MNCs), this paper intends to explore whether executives’ pension incentives will function as a mechanism of optimal contracting in motivating firm risk management. We find that granting more pension to executives is significantly related to the higher likelihood and intensity of currency hedging strategies in MNCs. This suggests that pension incentive should promote executives to more actively manage firms’ risk. Such a positive relationship is robust to endogeneity and is more prominent in firms with strong shareholder power. We further explore the contribution of currency hedging induced by pension incentives to shareholder value. Supporting the hypothesis of optimal contracting, our results indicate that pension incentives play an important role in reconciling managerial risk preference and shareholder value creation.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Board gender diversity: performance and risk of Brazilian firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mauro Mastella ◽  
Daniel Vancin ◽  
Marcelo Perlin ◽  
Guilherme Kirch
Keyword(s):  
Firm Performance ◽  
Boards Of Directors ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Firm Risk ◽  
Content Type ◽  
Study Approach ◽  
Female Presence ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to intend to check if female board representation affects performance and risk and to analyse the evolution of the demographic aspects of the presence of women on boards in Brazil. Design/methodology/approach The authors used a sample of 150 Brazilian publicly traded companies from 2010–2018, with different measures of firm performance, firm risk and women’s presence on the board. The study approach is based on a set of ordinary least squares, quantile and panel data regressions. Findings The presence of women on the board has a positive effect on all of our accounting and market performance measures. However, the result of the impact on risk is not conclusive. The study also found that the number of females on the board has a more significant effect at the lower levels of firm performance measured by return on equity, but at the higher levels when measured by Tobin’s Q. Regarding return on assets, the more significant effect happened on the extremes of the performance distribution. The study findings point that market investors place more value in female presence on the board than in director positions. Originality/value By estimating the impact of women’s presence on the boards of directors in firm performance and risk, this study aimed to verify this impact in different aspects of the company. In addition, the authors did so in a sample with many years, making it possible to evaluate the historical evolution of the feminine presence in the boards of administration as well as in the groups of directors, assisting Brazilian legislators with new evidence about the possible impacts of Draft Law 7179/2017.

The New Regulator in Town: The Effect of Walmart's Sustainability Mandate on Supplier Shareholder Value

2018 ◽  
Vol 82 (2) ◽  
pp. 124-141 ◽  
Author(s):  
Katrijn Gielens ◽  
Inge Geyskens ◽  
Barbara Deleersnyder ◽  
Max Nohe
Keyword(s):  
Brand Equity ◽  
Shareholder Value ◽  
Abnormal Returns ◽  
Short Term ◽  
Power Sources ◽  
Expert Power ◽  
Operational Characteristics ◽  
Countervailing Power ◽  
Cost Efficient ◽  
The Impact

Suppliers are increasingly being forced by dominant retailers to clean up their supply chains. These retailers argue that their sustainability mandates may translate into profits for suppliers, but many suppliers are cynical about these mandates because the onus to undertake the required investments is on them while potential gains may be usurped by the mandating retailer. We examine whether supplier fears are justified by studying the impact of Walmart's sustainability mandate on its suppliers’ (short-term) shareholder value. Although about two-thirds of suppliers are indeed financially harmed, approximately one-third benefit. To delve deeper into this variation, we relate suppliers’ short-term abnormal returns to Walmart's appropriation power and explore whether and to what extent a supplier's referent and expert power sources, derived from its marketing and operational characteristics, respectively, can counteract Walmart's appropriation attempts. We find that the supplier's marketing characteristics (its environmental reputation, brand equity, and advertising) provide it with the countervailing power needed to resist Walmart's appropriation attempts. In contrast, cost-efficient suppliers and suppliers that invest heavily in R&D have more difficulty withstanding Walmart's squeeze attempts.

scholarly journals Methods for share values assessment and shareholder value creation

2018 ◽  
Vol 6 (1) ◽  
pp. 39-49 ◽  
Author(s):  
Stefan Zimonjić ◽  
Milan Gavrilović ◽  
Miloš Roganović
Keyword(s):  
Value Creation ◽  
Shareholder Value ◽  
Values Assessment
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