scholarly journals CEO Monitoring and Board Effectiveness: Resolving the CEO Compensation Issue

2018 ◽  
Vol 21 (2) ◽  
pp. 123-134
Author(s):  
Chiraz Ben Ali ◽  
Frédéric Teulon
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Board Governance ◽  
Board Effectiveness ◽  
Past Performance ◽  
Compensation Committee ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

This study examines the impact of board governance mechanisms on the pay of Chief Executive Officers (CEOs) using a sample of major French listed companies for the 2009–2011 period. The results show that CEO pay is negatively associated with the presence of a family CEO and positively associated with board size, busy directors, board meetings, and compensation committee independence. We provide further evidence that CEO compensation increases with firm size, and both present and past performance. Our study casts doubt on the effectiveness of formal board attributes in constraining CEO compensation.

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.

scholarly journals The relationship between chief executive officer compensation and the size and industry of South African state-owned enterprises

2019 ◽  
Vol 17 ◽  
Author(s):  
Mariette Coetzee ◽  
Magda L. Bezuidenhout
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
African State ◽  
Chief Executive ◽  
Annual Reports ◽  
Performance Contracts ◽  
Ceo Pay ◽  
Managerial Implications ◽  
Executive Officers ◽  
The Relationship

Orientation: Concerns about exorbitant executive compensation are making headlines, because executives receive lucrative packages despite state-owned enterprises (SOEs) performing poorly. It appears as if chief executive officers (CEOs) are not being held accountable for the performance of the SOEs.Research purpose: The purpose of the study was to determine whether the size and the industry of an SOE had an impact on CEO compensation packages.Motivation for the study: A greater understanding of the relationship between CEO remuneration and the size and type of industry of SOEs would assist with the standardisation of CEO remuneration and linking CEO pay to SOE performance.Research approach/design and method: A multiple regression analysis on a pooled dataset of 162 panel observations was conducted over a 9-year period. Financial data of 18 SOEs were extracted from the McGregor BFA database and the annual reports of SOEs.Main findings: The findings show that the size of an SOE does not influence the total compensation of CEOs. However, larger SOEs pay larger bonuses due to these SOEs being in a stronger financial position to offer lucrative bonuses. CEO’s remuneration was aligned within certain industries.Practical/managerial implications: The findings emphasise the need to link CEO compensation with SOE performance. Standardisation in setting CEO compensation and implementing performance contracts should be considered.Contribution/value-add: The study confirms that CEO pay is not linked to performance and not justified when considering SOE size or industry.

CEO statements on racial inequity – (how) do they matter to shareholders?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pyemo Afego ◽  
Imhotep Alagidede
Keyword(s):  
Chief Executive Officers ◽  
Social Issues ◽  
Chief Executive ◽  
Future Research ◽  
Research Approach ◽  
Content Type ◽  
Racial Injustice ◽  
Communication Decisions ◽  
Executive Officers ◽  
The Impact

Purpose The purpose of this study is to explore how citizen protests against perceived acts of racial injustice impact on share prices of companies who weigh in on the protests. In particular, corporate statements that directly address the issues around the protests are identified and possible mechanisms underlying how these may impact shareholder value are discussed. Design/methodology/approach The authors first use a qualitative research approach of content and sentiment analysis to track how companies or their chief executive officers (CEOs) present their stance against racial injustice, as represented by their use of linguistic markers. Then, the authors use an event study methodology to assess the response from stock market participants. Findings The findings suggest that CEOs primarily convey their stance using language that is emotive and empathic. In addition, shareholders earn a significant abnormal return of 2.13%, on average, in the three days following the release of the statements. Research limitations/implications This study considered only US-listed companies. The sample size, also, is relatively small. Institutional and cultural differences across countries may also vary. Thus, future research could explore the extent to which the findings generalize to other contexts. Practical implications Results provide insights to top managers who communicate with various stakeholders on emotionally charged social issues. Findings also offer insights on the timing of trades for investors and arbitrageurs. Social implications Findings contribute to the understanding of corporate behaviour in times of social upheaval. Insights from the study may also be used to inform corporate communication decisions about important social issues. Originality/value This study brings into focus the role that affective appeal and moral emotion can play in evoking motivation for corporate activism, and the impact that this has on investor opinions’ formation process.

The two sides of CEO pay injustice

2018 ◽  
Vol 16 (1) ◽  
pp. 3-30 ◽  
Author(s):  
Herman Aguinis ◽  
Geoffrey P. Martin ◽  
Luis R. Gomez-Mejia ◽  
Ernest H. O’Boyle ◽  
Harry Joo
Keyword(s):  
Normal Distribution ◽  
Power Law ◽  
Chief Executive Officers ◽  
Risk Sharing ◽  
Chief Executive ◽  
Return On Assets ◽  
Content Type ◽  
Ceo Pay ◽  
Executive Officers ◽  
Two Sides

Purpose The purpose of this study was to examine the extent to which chief executive officers (CEOs) deserve the pay they receive both in terms of over and underpayment. Design/methodology/approach Rather than using the traditional normal distribution view in which CEO performance clusters around the mean with relatively little variance, the authors adopt a novel power law approach. They studied 22 industries and N = 4,158 CEO-firm combinations for analyses based on Tobin’s Q and N = 5,091 for analyses based on return on assets. Regarding compensation, they measured the CEO distribution based on total compensation and three components of CEO total pay: salary, bonus, and value of options exercised. Findings In total, 86 percent of CEO performance and 91 percent of CEO pay distributions fit a power law better than a normal distribution, indicating that a minority of CEOs are producing top value for their firms (i.e. CEO performance) and a minority of CEOs are appropriating top value for themselves (i.e. CEO pay). But, the authors also found little overlap between CEOs who are the top performers and CEOs who are the top earners. Implications The findings shed new light on CEO pay deservingness by using a novel conceptual and methodological lens that highlights systematic over and underpayment. Results suggest a violation of distributive justice and offer little support for agency theory’s efficient contracting hypothesis, which have important implications for agency theory, equity theory, justice theory, and agent risk sharing and agent risk bearing theories. Practical implications Results highlight erroneous practices when trying to benchmark CEO pay based on average levels of performance in an industry because the typical approach to CEO compensation based on averages significantly underpays stars and overpays average performers. Originality/value Results offer new insights on the extent of over and underpayment. The findings uncover an extremely large non-overlap between the top earning and top performing CEOs and to an extent far greater in magnitude than previously suggested.

No-Fly Zone in the Loan Office: How Chief Executive Officers’ Risky Hobbies Affect Credit Stakeholders’ Evaluation of Firms

2021 ◽  
Author(s):  
Bo Ouyang ◽  
Yi Tang ◽  
Chong Wang ◽  
Jian Zhou
Keyword(s):  
Chief Executive Officers ◽  
Default Risk ◽  
Chief Executive ◽  
Bank Loans ◽  
Bank Loan ◽  
Cost Of Debt ◽  
Data Set ◽  
Work Related ◽  
Executive Officers ◽  
The Impact

The extant research has often examined the work-related experiences of corporate executives, but their off-the-job activities could be just as insightful. This study employs a novel proxy for the risky hobbies of chief executive officers (CEOs)—CEOs’ hobby of piloting a private aircraft—and investigates its effect on credit stakeholders’ evaluation of the firms led by the CEOs as reflected in bank loan contracting. Using a longitudinal data set on CEOs of large United States-listed firms across multiple industries between 1993 and 2010, we obtain strong evidence that bank loans to firms steered by CEOs who fly private jets as a hobby tend to incur a higher cost of debt, to be secured, to have more covenants, and to be syndicated. These effects are mainly driven by banks, which perceive such firms as having a higher default risk. These relationships become stronger when the CEO is more important to the firm and/or can exercise stronger control over decision making. Supplemented by field interviews, our results are also robust to various endogeneity checks using different experimental designs, the Heckman two-stage model, a propensity score-matching approach, a difference-in-differences test, and the impact threshold of confounding variables.

Impact of Public Policy on Small Third Sector Social Enterprises

2017 ◽  
pp. 84-107
Keyword(s):  
Public Policy ◽  
Chief Executive Officers ◽  
Third Sector ◽  
Chief Executive ◽  
Social Enterprises ◽  
Policy Framework ◽  
Structured Interviews ◽  
Hr Managers ◽  
Executive Officers ◽  
The Impact

This chapter provides important perspectives from key informants about their experiences of the impact of public policy on small social enterprises. Semi-structured interviews were conducted with the 10 Chief Executive Officers (CEOs), 8 HR managers, and 46 operational managers working in small third sector social enterprises in four UK regions to ascertain how government policy framework poses challenges and/or encourages small third sector social enterprises growth and success. There is clear evidence that changes in public policy have had some challenging effect on services development and in several regions, with core services, training and employment support and preventative services are showing a net deterioration.

The effects of global financial crisis on the relationship between CEO compensation and earnings management

2020 ◽  
Vol 28 (2) ◽  
pp. 389-408 ◽  
Author(s):  
Oheneba Assenso-Okofo ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Global Financial Crisis ◽  
Chief Executive ◽  
Content Type ◽  
Multivariate Tests ◽  
Executive Officers ◽  
The Relationship

Purpose This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals. Design/methodology/approach The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust. Findings The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC. Practical implications The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances. Originality/value So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.

Corporate dispersion and tax avoidance

2019 ◽  
Vol 13 (3) ◽  
pp. 706-732 ◽  
Author(s):  
Kun Su ◽  
Bin Li ◽  
Chen Ma
Keyword(s):  
Internal Control ◽  
Chief Executive Officers ◽  
Tax Avoidance ◽  
Chief Executive ◽  
Corporate Tax ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Executive Officers ◽  
The Impact

Purpose The purpose of this paper is to investigate the effects of corporate dispersion on tax avoidance from geographical and institutional dispersion perspectives by using evidence from China. Design/methodology/approach Using a panel data of Chinese listed firms during 2003-2015, this paper estimates with correlation analysis and multiple regression analysis. Findings Both geographical and institutional dispersion are negatively associated with the degree of corporate tax avoidance. Furthermore, corporate governance mechanisms and female chief executive officers can mitigate the negative relation between corporate dispersion and tax avoidance. The results also indicate that ineffective internal control is one of the channels through which corporate dispersion reduces tax avoidance. Originality/value This is the first paper about the impact of firm dispersion on the degree of tax avoidance, complementing the research content of diversification and corporate decision-making.

Limiting Executive Compensation: The Case of CEOs Hired after the Imposition of 162(m)

2007 ◽  
Vol 22 (4) ◽  
pp. 599-621 ◽  
Author(s):  
Steven Balsam ◽  
David H. Ryan
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Executive Pay ◽  
Internal Revenue ◽  
Compensation Package ◽  
Bonus Pay ◽  
Executive Officers

This study analyzes the effect of Internal Revenue Code section 162(m) on the compensation package of those chief executive officers (CEOs) hired after the imposition of this code section. Research documents that CEO compensation has increased dramatically since the imposition of section 162(m); yet, this research has not distinguished between the effects on the compensation of CEOs already in place when section 162(m) was imposed from those CEOs hired post-162(m) imposition. We focus our analysis on the compensation of CEOs hired after the imposition of section 162(m), because when firms hire a new CEO, they have a better opportunity to redesign the executive pay package. Consequently, we posit that section 162(m) will have its greatest effect when the affected companies change CEOs. Our analysis provides evidence that the increase in salary normally associated with the hiring of a new CEO has been mitigated and there has been an increase in the sensitivity of firm performance to bonus pay for CEOs appointed after 1994 in affected firms.

Manager traits and quality-of-care performance in hospitals

2015 ◽  
Vol 28 (3) ◽  
pp. 200-215 ◽  
Author(s):  
Kjeld Harald Aij ◽  
René L.M.C. Aernoudts ◽  
Gepke Joosten
Keyword(s):  
Quality Of Care ◽  
Organizational Performance ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Content Type ◽  
Lean Transformation ◽  
Executive Officers ◽  
The Impact ◽  
Care Performance

Purpose – This paper aims to assess the impact of the leadership traits of chief executive officers (CEOs) on hospital performance in the USA. The effectiveness and efficiency of the CEO is of critical importance to the performance of any organization, including hospitals. Management systems and manager behaviours (traits) are of crucial importance to any organization because of their connection with organizational performance. To identify key factors associated with the quality of care delivered by hospitals, the authors gathered perceptions of manager traits from chief executive officers (CEOs) and followers in three groups of US hospitals delivering different levels of quality of care performance. Design/methodology/approach – Three high- and three low-performing hospitals were selected from the top and bottom 20th percentiles, respectively, using a national hospital ranking system based on standard quality of care performance measures. Three lean hospitals delivering intermediate performance were also selected. A survey was used to gather perceptions of manager traits (providing a modern or lean management system inclination) from CEOs and their followers in the three groups, which were compared. Findings – Four traits were found to be significantly different (alpha < 0.05) between lean (intermediate-) and low-performing hospitals. The different perceptions between these two hospital groups were all held by followers in the low-performing hospitals and not the CEOs, and all had a modern management inclination. No differences were found between lean (intermediate-) and high-performing hospitals, or between high- and low-performing hospitals. Originality/value – These findings support a need for hospital managers to acquire appropriate traits to achieve lean transformation, support a benefit of measuring manager traits to assess progress towards lean transformation and lend weight to improved quality of care that can be delivered by hospitals adopting a lean system of management.

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