CEO Compensation Contracts in Family Versus Nonfamily Firms: The Use of Nonfinancial Performance Measures

IF 4.6 3区管理学 Q1 BUSINESS

Corporate Governance-An International Review Pub Date : 2024-08-27 DOI:10.1111/corg.12612

Adnan Afridi, Paula M. G. Dirks, Vlad‐Andrei Porumb, Yasemin Zengin‐Karaibrahimoglu

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引用次数: 0

Abstract

Research Question/IssueThis study examines the association between ownership type—family versus nonfamily firms—and CEO family status—family CEO versus professional CEO—and the use of nonfinancial performance measures (NFPMs) in CEO compensation contracts.Research Findings/InsightsUsing a sample of 3143 firm‐year observations of S&P 500 nonfinancial firms from 2010 to 2018, we find that family firms place a significantly lower weight on NFPMs in CEO compensation contracts than nonfamily firms. Within family firms, we find that a significantly lower weight is placed on NFPMs in compensation contracts for family CEOs relative to those for professional CEOs. Furthermore, additional tests indicate that the negative association between family ownership and the weight placed on NFPMs is stronger (weaker) in firms with low (high) stakeholder visibility.Theoretical ImplicationsWe advance the academic literature on the selection of performance measures in compensation contracts by providing insight into the implications of family ownership and of a CEO's family ties for the use of NFPMs. The results suggest that because family firms have a good ability and a strong incentive to directly monitor and control their CEO's actions, NFPMs are less needed in CEO compensation contracts as a means to align goals. Furthermore, the effects we document are even stronger when the CEOs of family firms are family members.Practitioner/Policy ImplicationsThe results imply that while family firms may not need a high weight on NFPMs in CEO compensation contracts to monitor their CEOs' actions, goal alignment, and internal communication of nonfinancial targets, they may still need them for communication and signaling purposes when exposed to external stakeholder monitoring.

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家族企业与非家族企业首席执行官的薪酬合同：非财务绩效衡量标准的使用

研究结果/见解利用 2010 年至 2018 年 S&P 500 非金融企业的 3143 个公司年观察样本，我们发现家族企业在 CEO 薪酬合同中对 NFPM 的重视程度明显低于非家族企业。在家族企业内部，我们发现家族首席执行官的薪酬合同中，NFPM 的权重明显低于职业首席执行官的薪酬合同。此外，其他测试表明，在利益相关者知名度较低（较高）的公司中，家族所有权与 NFPMs 所占权重之间的负相关关系更强（更弱）。理论意义我们通过深入研究家族所有权和 CEO 的家族关系对 NFPMs 使用的影响，推进了有关薪酬合同中绩效衡量标准选择的学术文献。研究结果表明，由于家族企业有很好的能力和强烈的动机来直接监督和控制其首席执行官的行为，因此在首席执行官的薪酬合同中较少需要 NFPM 作为调整目标的手段。此外，当家族企业的首席执行官是家族成员时，我们所记录的效果会更强。结果表明，虽然家族企业可能不需要在首席执行官薪酬合同中加入高权重的 NFPM 来监督其首席执行官的行动、目标一致性以及非财务目标的内部沟通，但当面临外部利益相关者的监督时，他们可能仍然需要 NFPM 来达到沟通和传递信号的目的。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Corporate Governance-An International Review Multiple-

CiteScore

7.00

自引率

11.30%

发文量

期刊介绍： The mission of Corporate Governance: An International Review is to publish cutting-edge international business research on the phenomena of comparative corporate governance throughout the global economy. Our ultimate goal is a rigorous and relevant global theory of corporate governance. We define corporate governance broadly as the exercise of power over corporate entities so as to increase the value provided to the organization"s various stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm. Because of this broad conceptualization, a wide variety of academic disciplines can contribute to our understanding.