The Role of Manager Compensation and Integrated Reporting in Company Value: Indonesia vs. Singapore

The disclosure of integrated reporting elements can reduce information asymmetry for investors when valuing a company. This study aimed to empirically evaluate the effect of manager compensation, directly or indirectly, on firm value, through the mediating role of the disclosure of integrated reporting elements. The research sample included manufacturing companies listed on the Indonesia Stock Exchange (IDX) and the Singapore Stock Exchange (SGX). The method of analysis was PLS-SEM, using the WarpPLS 7.0 application. The results showed that compensation significantly affects firm value and the disclosure of integrated reporting elements. Integrated reporting has a significant positive impact on firm value. In addition, the disclosure of integrated reporting can mediate the impact of manager compensation on increasing firm value. This research theoretically supports agency theory, disclosure theory, and signal theory, although it is not fully applicable to each country or region of the sample company. The current research contributes to the understanding of the importance of a company’s integrated reporting disclosure in improving company value among investors. Integrated reporting describes how a company creates value over time. Our results also suggest that regulators should oblige public companies to disclose integrated reporting.

Preferred Stock Awards: A Novel Idea for Manager Compensation

Congress should allow a unique class of preferred shares whose dividends are tax-deductible as long as a significant majority of senior management compensation is in the form of these shares. Tax-deductible interest should be further limited to compel firms to issue these shares because a lower tax liability will increase firm value. Managers will be discouraged from making high-variance and often losing bets with other peoples’ money because they will have skin in the game. Their compensation will be directly tied to corporate performance rather than the volatility of the stock market, which is the case with common stock and options awards.

Benchmarking mutual fund alpha

Purpose The standard market models assume that all investors are rational with the same level of risk aversion, whereas investors in the real world are neither rational nor homogeneous. This contrast makes these models inappropriate for evaluating manager skill. The purpose of this paper is to attempt to bridge the gap between model assumption and fund investment practice. Design/methodology/approach This study proposes a series of modified models using the excess return of peer funds to estimate fund alpha. In these models, the market excess return in the standard market models is replaced with the average excess return of bootstrapped funds. In addition, the author examines the reasons for the difference between the modified models and the standard models. Findings The modified models better explain the variation of fund returns, and they exhibit that a considerably higher percentage of funds can earn positive alpha, thus the skill of fund managers is underestimated based on the standard market models. Originality/value The proposed models provide a more reliable method for investors to identify skilled fund managers, and they can also serve as an objective benchmark in evaluating fund performance and in designing manager compensation packages.