Excessive managerial entrenchment, corporate governance, and firm performance

2019 ◽  
Author(s):  
◽  
Christelle Antounian
Keyword(s):  
Firm Performance ◽  
Firm Value ◽  
Ceo Compensation ◽  
Inverse Correlation ◽  
Poor Performance ◽  
Ceo Turnover ◽  
Managerial Entrenchment ◽  
Board Monitoring ◽  
The Difference ◽  
The Impact

This paper investigates the impact of excessive managerial entrenchment on the CEO turnover-performance sensitivity, CEO compensation, and firm value. We measure the degree of managerial entrenchment based on the E-index presented by Bebchuck et al. (2006). Our main focus is on firms’ excess managerial entrenchment, which is calculated by finding the difference between firm’s E-index and its industry median in a given year. Our findings suggest that an increase in excess CEO entrenchment reduces the likelihood of CEO turnover due to poor performance. We also show a positive correlation between excessive entrenchment and CEO compensation as managers gain more power and authority when they are entrenched. On the other hand, excess CEO entrenchment has an inverse correlation with firm value. We propose that excessive managerial entrenchment has a converse impact on board monitoring and firm performance. Also, we suggest that a sound corporate protects the shareholders’ interests as it prevents CEOs from over entrenchment.

Board Activity and Firm Performance

2017 ◽  
Vol 10 (1) ◽  
pp. 44-57
Author(s):  
Jyoti Paul
Keyword(s):  
Firm Performance ◽  
Empirical Evidence ◽  
Performance Measures ◽  
Firm Value ◽  
The Past ◽  
Point Estimates ◽  
Board Monitoring ◽  
The Impact ◽  
The Relationship

Because of recent failures in the past, the role of Board and the Board monitoring have become important. The directors are expected to be more accountable. In this study, the researcher tries to investigate the relationship between the level of board activity and firm value for firms in FMCG sector over a three-year period from 2010–2011 to 2012–2013. The primary aim of the article is to provide empirical evidence and specifically find out the impact of board activity measured by number of meetings and its impact on firm performance. The results indicate that the attendance in board meetings is significantly positively correlated with ROA. The OLS results with both the performance measures show that the point estimates of attendance at board meetings were significant indicating that attendance in such meetings is perceived to be an indicator of good monitoring activities of the board.

scholarly journals CEO Compensation and Firm Performance: The Role of ESG Transparency

2020 ◽  
Vol 4 (2) ◽  
pp. 278
Author(s):  
Chetna Rath ◽  
Florentina Kurniasari ◽  
Malabika Deo
Keyword(s):  
Firm Performance ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Negative Relationship ◽  
Chief Executive ◽  
Long Run ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

Chief executive officers (CEOs) of environmental, social, and governance (ESG) firms are known to take lesser pay and engage themselves in corporate social responsibility activities to achieve the dual objective of the enhancement of firm’s performance as well as benefit for stakeholders in the long run. This study examines the role of ESG transparency in strengthening the impact of firm performance on total CEO pay in ESG firms. A panel of 67 firms for the period of 2014–2019 has been analyzed using the two-step system GMM model, with NSE Nifty 100 ESG Index as the data sample and ESG scores from Bloomberg database as a proxy for transparency. Findings reveal that environmental and governance disclosure scores have the potential to intensify the negative relationship between firm performance and CEO compensation, while social disclosure scores do not. In addition, various firm-specific, board-specific, and CEO-specific attributes have also been considered controls affecting remuneration. This paper contributes to the literature by exploring the effect of exhibiting ESG transparency and its nexus with CEO pay as well as firm performance.

The Business Value of IT: A Synthesis and Framework of Archival Research

2011 ◽  
Vol 25 (2) ◽  
pp. 81-116 ◽  
Author(s):  
Adi Masli ◽  
Vernon J. Richardson ◽  
Juan Manuel Sanchez ◽  
Rodney E. Smith
Keyword(s):  
Firm Performance ◽  
Balanced Scorecard ◽  
Business Strategy ◽  
Firm Value ◽  
Business Value ◽  
Future Research ◽  
Archival Research ◽  
Accounting Information Systems ◽  
Business Context ◽  
The Impact

ABSTRACT This paper synthesizes recent empirical archival research investigating the link between information technology investment and business value. It examines (1) financial and nonfinancial measures to represent different elements of business value, (2) IT investment measures and links with firm performance, (3) IT and business complementarities that affect firm performance, and (4) the impact of business context and IT alignment with business strategy on resulting performance. The review of prior research is guided by a balanced scorecard framework that places IT in a business context and highlights the role of potential drivers and contextual factors that impact the association between IT and firm value. The paper concludes by proposing several broad avenues of future research that may be of particular interest to archival accounting information systems researchers.

The impact of CEO turnover on firm performance around interim successions

2012 ◽  
Vol 18 (2) ◽  
pp. 541-587 ◽  
Author(s):  
Vincent J. Intintoli ◽  
Andrew Zhang ◽  
Wallace N. Davidson
Keyword(s):  
Firm Performance ◽  
Ceo Turnover ◽  
The Impact

scholarly journals Jump Diffusion Models for Risky Debts: Quality Spread Differentials

2003 ◽  
Vol 06 (06) ◽  
pp. 655-662 ◽  
Author(s):  
Hoi Ying Wong ◽  
Yue Kuen Kwok
Keyword(s):  
Diffusion Process ◽  
Closed Form ◽  
Firm Value ◽  
Jump Diffusion ◽  
Brownian Diffusion ◽  
Fixed Rate ◽  
Floating Rate ◽  
The Difference ◽  
The Impact ◽  
Risky Debt

The quality spread differential is defined to be the difference between the default premiums demanded for fixed rate and floating rate risky debts. The risky debt model based on Merton's firm value approach is used to examine the behaviors of the quality spread differential of fixed rate and floating rate debts. We extend earlier result by adopting Geometric Brownian diffusion process with jumps for the underlying firm value process of the debt issuer. Closed form formulas are obtained for the default premiums for risky debts. The impact of the jumps on the fixed-floating spread differential is examined.

scholarly journals CORPORATE GOVERNANCE AND FIRM VALUE IN EMERGING MARKETS AN EMPIRICAL ANALYSIS OF ADR ISSUING EMERGING MARKET FIRMS

2012 ◽  
Vol 2 (1) ◽  
pp. 38-51 ◽  
Author(s):  
Aysun Ficici ◽  
C. Bulent Aybar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Emerging Market ◽  
Market Value ◽  
Governance Structures ◽  
Market Values ◽  
Good Corporate Governance ◽  
Emerging Market Firms ◽  
The Impact

This study explores the value implications of good corporate governance for a sample of 54 ADR issuing emerging market firms (EMFs) from 9 countries primarily located in the regions of Asia, Eastern Europe and Latin America and the and employs recently constructed company composite corporate governance metric along with some alternative corporate governance measures associated with the origin of the issuing firm. Although the ADR literature primarily focuses on the impact of subscription to US disclosure requirements we contend that company and country specific corporate governance standards play a significant role in the risk reduction and ensuing value capture.  The fundamental inquiry in this study has the following foci: The primary focus is on the impact of corporate governance structures on firm performance as to whether adherence to standards creates market value for ADR issuing EMFs.  Do good corporate governance practices affect the value of EMFs? The secondary focus is concerned with whether the impact of corruption level and legal system in a firm’s home country affect the corporate structures of EMFs thus affecting the market value of firms.  In this study, we utilize Tobin’s q as the measure of firm performance/market value.  Our findings suggest that there is a significant correlation between corporate governance structures of ADR issuing EMFs and their market values and/or performances.  The results also indicate that the level of corruption and legal structures in home countries of EMFs strongly impact the corporate governance structures of these firms and sequentially affect their market values. Therefore, this research further contributes to the scholarly findings and suppositions that corporate structures of firms do create consequences on firm value.

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