scholarly journals Executive pay and market value sensitivity

2016 ◽  
Vol 63 (4) ◽  
pp. 411-424
Author(s):  
Feng-Li Lin
Keyword(s):  
Firm Value ◽  
Optimal Level ◽  
Smooth Transition ◽  
Net Income ◽  
Executive Pay ◽  
Compensation Policy ◽  
Listed Firms ◽  
Smooth Transition Regression ◽  
High Level ◽  
Smooth Transition Regression Model

Executive pay relative to that of average workers has risen dramatically worldwide. Such a high level of executive pay raises the question of whether a steep rise in executive pay affects firm value. This study examined the relationship between executive pay and firm value. A panel smooth transition regression model is adopted to determine an optimal level of executive pay that maximizes firm value for a sample of 512 Taiwanese-listed firms over the period 2006-2011. The finding is that when the ratio of executive pay to net income after tax exceeds 2.71%, the firm value increases. The results suggest a correlation between large executive ownership (corresponding to high executive pay) and both increased operational efficiencies and firm value. These findings may be useful when contemplating executive compensation policy.

scholarly journals Board Interlocking no Brasil: A Participacão de Conselheiros em Múltiplas Companhias e seu Efeito sobre o Valor das Empresas

2007 ◽  
Vol 5 (2) ◽  
pp. 125 ◽  
Author(s):  
Rafael Liza Santos ◽  
Alexandre Di Miceli da Silveira
Keyword(s):  
Firm Value ◽  
Operational Performance ◽  
Interlocking Directorates ◽  
Listed Firms ◽  
Ownership Structures ◽  
Multiple Directorships ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
High Level ◽  
Dispersed Ownership

This paper investigates the simultaneous participation of directors in different companies from 320 Brazilian listed firms in 2003 and 2005. We identify which firms are connected through a network of directors, which corporate characteristics contribute to this phenomenon, and if board interlocking influences firm value and operational performance. The results show that interlocking directorates are a common practice in Brazil. Besides, larger boards, more dispersed ownership structures, and larger firm size are factors associated with a high level of board interlocking. Moreover, we find that firm value is, on average, negatively impacted by higher levels of board interlocking, especially on firms with board of directors considered too busy (those in which a majority of directors hold three or more directorships) or on firms where their CEO hold directorships in other companies. Besides being a pioneer work on this field in Latin America, the paper provides subsides for the preparation of good corporate governance practices from regulators regarding the effectiveness of multiple directorships and its consequences for corporate value.

MODELING THE PHILLIPS CURVE IN CHINA: A NONLINEAR PERSPECTIVE

2016 ◽  
Vol 21 (2) ◽  
pp. 439-461 ◽  
Author(s):  
Lingxiang Zhang
Keyword(s):  
Regression Model ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Smooth Transition ◽  
Short Term ◽  
Smooth Transition Regression ◽  
Using Data ◽  
Smooth Transition Regression Model ◽  
Economic Growth Rates ◽  
The Relationship

This paper investigates the nonlinear dynamics of the inflation–output type of Phillips curve based on a multiple-regime smooth transition regression model using data from China. The empirical results indicate significant nonlinearities in China's Phillips curve. The relationship between inflation and output can be modeled by a four-regime smooth transition regression model in which the responses of inflation to output depend on both inflation and economic growth rates. The inflation–output type Phillips curve may be positively sloped, negatively sloped, or even vertical in the short term, depending on different business cycles. Furthermore, we analyze business cycle fluctuations based on the nonlinear Phillips curve, indicating a coexisting zone of stable inflation rate and rapid growth rate.

scholarly journals Regional heterogeneity among non-operating earnings quality, stock returns, and firm value in biotech industry

2019 ◽  
Vol 65 (No. 1) ◽  
pp. 10-20 ◽  
Author(s):  
Joe-Ming Lee
Keyword(s):  
Stock Returns ◽  
Firm Value ◽  
Earnings Quality ◽  
Smooth Transition ◽  
Regional Heterogeneity ◽  
Operating Income ◽  
Biotech Industry ◽  
Smooth Transition Regression ◽  
Smooth Transition Regression Models ◽  
Quality Stock

This paper analyses regional heterogeneity under the discretionary measures of non-operating earnings quality and stock returns on firm value in Taiwan’s biotech industry during 2008–2015. An econometric framework based on panel smooth transition regression models is employed in a non-linear panel data model. The results show that biotech firms near the bottom threshold for operating income have low-quality non-operating earnings and those near the upper threshold demonstrate the opposite. Investors who exclusively focus on stock returns are thus likely to miss important information about the quality of earnings.

Does Convertible Arbitrage Risk Exposure Vary Through Time?

2018 ◽  
Vol 21 (04) ◽  
pp. 1850026
Author(s):  
Liam Gallagher ◽  
Mark Hutchinson ◽  
John O’Brien
Keyword(s):  
Abnormal Returns ◽  
Smooth Transition ◽  
Gradual Transition ◽  
Linear Framework ◽  
High Volatility ◽  
Smooth Transition Regression ◽  
Arbitrage Risk ◽  
Low Exposure ◽  
Arbitrage Strategy ◽  
Smooth Transition Regression Model

We model the returns of the convertible arbitrage strategy using a non-linear framework. This strategy has generated long periods of positive returns and low volatility, followed by shorter periods of extreme negative returns and high volatility, associated with market upheaval. We specify a smooth transition regression model to assess performance, a class of model particularly suited to this type of strategy as it allows gradual transition between risk regimes. We show that in alternate regimes, the strategy exhibits relatively high (low) exposure to risk factors and alpha is high (low). The evidence reported can account for abnormal returns demonstrated in previous studies.

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