Corporate Governance: Compensation of Executive & Directors eJournal最新文献

{"title":"Does the Age of Compensation Committee Members Matter for CEO Compensation?","authors":"Yiwei Li, M. Clements, Carol Padgett, Xiu‐Ye Zhang","doi":"10.2139/ssrn.3871605","DOIUrl":"https://doi.org/10.2139/ssrn.3871605","url":null,"abstract":"We examine the impact of the age of compensation committee (CC) members on CEO compensation. Sociological theory suggests that age is a significant demographic factor influencing behavior. We argue that monitoring intensity increases with age because older directors are more likely to commit to their fiduciary duties.Using FTSE 350 firms for the period 2002 to 2017, we find that CC members' age is negatively associated with the level of CEO pay but positively associated with pay–performance sensitivity after controlling for risk aversion attitude, experience in board monitoring, knowledge of the firm, and other firm and CEO characteristics. The relationships remain robust to alternative measures for age and compensation, using two‐stage least squares and high‐dimensional fixed effects models. Consistent with the view that older individuals tend to hold higher ethical standards and concomitant closer monitoring, we find that age effects are sensitive to the influence of ethical factors and are strongest for those firms for which intense monitoring is most needed. This suggests that age operates via older directors carrying out their roles more assiduously. We further show that our findings are less likely to be driven by director reputational effects, and the relationship between CC member age and CEO compensation persists even when we control for multiple dimensions of culturally inherited attributes of the CC members.Despite the large literature on the influence of demographic characteristics on corporate governance, this study is the first on the monitoring effect of CC members' age. It contributes to the literature on the influence of demographic characteristic. It also contributes to the literature on CEO compensation by identifying a demographic factor—age—as a determinant of CEO pay, after controlling for the economic and corporate governance variables of the firm.This study highlights the role of demographic factors in explaining the monitoring of the CEO compensation contracting process and provides timely evidence on the recent regulatory changes.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131244276","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Does Compensation Matter? Evidence from CD&A Disclosures","authors":"Xiumin Martin, Jie Xu, Guofu Zhou","doi":"10.2139/ssrn.3819394","DOIUrl":"https://doi.org/10.2139/ssrn.3819394","url":null,"abstract":"We study whether the similarity of firm disclosures on the Compensation Discussion and Analysis (CD&A) has predictability for future stock returns. We find that changes to the language and construction of the CD&As predict firms' future stock returns. A portfolio that longs the CD&A \"non-changers\" and shorts the \"changers\" earns a significant Fama-French 5-factor alpha of 5.86% (annualized), for the period of 2008-2020. We further find that companies with low CD&A similarities invest less in R&D, are more likely to be targeted by short-sellers, and have greater forced CEO turnovers. Our results provide new and strong evidence on the role of executive compensation in the cross-section of stock returns.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116309685","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Managerial Incentives to Innovate During Crises: The Schumpeterian View","authors":"Petra Sinagl, Jiawei Wang","doi":"10.2139/ssrn.3761498","DOIUrl":"https://doi.org/10.2139/ssrn.3761498","url":null,"abstract":"Existing literature offers opposing views on the effects of financial crises on firm innovation. We provide evidence supporting the Schumpeter’s view of the creative destruction of crises. We identify one specific channel, the internal compensation mechanism that firms use to motivate managers to innovate during crises, as an important driver that improves firm innovative output. We show that during financial crises, increasing managerial option pay leads to firms producing more, higher quality patents as compared to normal times. Moreover, we find that less financially constrained firms are relatively better able to innovate by compensating managers with options. We identify exogenous variation in option compensation using multiyear option plans. Our results indicate that crises provide unique growth opportunities for innovative firms.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"51 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125642716","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"CEO Compensation and Risk-Taking: Evidence from Listed European Hotel Firms","authors":"Olga Fullana, Alba María Priego de la Cruz, David Toscano","doi":"10.2139/ssrn.3743575","DOIUrl":"https://doi.org/10.2139/ssrn.3743575","url":null,"abstract":"This paper examines the relationship between CEO compensation policies and financial performance in the European hotel sector. We analyze CEO cash-, equity- and total-compensation relationships with two accounting-based and two market-based financial performance proxies, including a bi-dimensional proxy formed by stock market return and risk. This bi-dimensional market-based financial performance proxy enables us to take a deep dive into the relationship between CEO compensation policies and firm risk-taking. We then analyze the nature of this relationship by decomposing market-based risk into systematic and idiosyncratic risk, using five alternative asset-pricing factorial models. Our results support a negative and significant relationship between CEO compensation policies and risk-taking by hotel firms. Moreover, we present evidence that relates this result directly with the idiosyncratic risk assumed by these European companies.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121201330","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"CEO-to-Employee Pay Ratio and CEO Diversity","authors":"Nazli Sila Alan, K. Bardos, Natalya Y. Shelkova","doi":"10.2139/ssrn.3685861","DOIUrl":"https://doi.org/10.2139/ssrn.3685861","url":null,"abstract":"PurposeThe motivation behind Section 953(b) of Dodd–Frank Act was the increasing pay inequality and supposed CEOs' rent extraction. It required public companies to disclose CEO-to-employee pay ratios. Using the ratios reported by S&P 1500 firms in 2017–18, this paper examines whether companies led by women and minority CEOs have lower ratios than those led by white male CEOs.Design/methodology/approachThis paper uses multivariate regression along with a matched sample analysis to examine whether female and minority CEOs have higher CEO-to-employee pay ratios compared to male and white CEOs, controlling for other determinants of pay ratios.FindingsResults indicate that CEO-to-employee pay ratios are 22–28% higher for female CEOs compared to their male counterparts, controlling for other determinants of pay ratios. There is, however, no statistically significant difference between the pay ratios of minority vs white male CEOs. Minority female CEOs have lower CEO-to-employee pay ratios than white female CEOs. Consistent with literature, larger and more profitable firms have higher CEO-to-employee pay ratios.Originality/valueWhile prior studies on determinants of CEO-to-employee pay ratios have used either industry-level or self-reported data for a small subset of firms (resulting in selection bias), this paper uses firm-level data that are available for all S&P 1500 firms due to new disclosure requirements due to the Dodd–Frank Act Section 953(b). Moreover, this is the first paper to test whether gender or ethnicity of a CEO affects within-firm pay inequality.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131094057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"CEO Incentive Contracts, Risk Shifting, and Commitment Benefits of Gender Diverse Boards","authors":"Vikram Nanda, Andrew K. Prevost, Arun Upadhyay","doi":"10.2139/ssrn.3383644","DOIUrl":"https://doi.org/10.2139/ssrn.3383644","url":null,"abstract":"We argue gender-diverse boards are associated with distinct preferences that reassure investors about their commitment to moderate risk and boost long-term corporate survival. Results suggest a strong relation between gender-diverse boards and bondholder-aligned CEO compensation components, particularly when CEOs have greater incentives to take and shift risk. This association is robust to a variety of controls for potential endogeneity, and is more pronounced when women directors are on compensation committees, regularly attend meetings and have influential backgrounds. Compensation spillovers occur with gender-diverse boards choosing similar peers. Bond and stock prices increase around female director appointment announcements, especially for high-yield issuers.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123314697","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Operating Cash Flows and Earnings Target Revision","authors":"Wei Zhu, L. Li, Shuyang Wang","doi":"10.2139/ssrn.3000553","DOIUrl":"https://doi.org/10.2139/ssrn.3000553","url":null,"abstract":"We examine the extent to which current operating cash flows are incorporated in future earnings targets in executive compensation. Using target and actual compensation earnings per share (EPS) disclosed in proxy statements for large U.S. public companies, we find that revision of the following year’s EPS target is unrelated to current operating cash flows. Because of the positive association of operating cash flows with future earnings incremental to current earnings, failing to incorporate operating cash flows in target revision results in more achievable earnings targets for firms with higher operating cash flows. Interestingly, we find that the positive relationship between target achievability and operating cash flows is attributable to both expectation bias related to operating cash flows and contractual considerations designed to reward CEOs who deliver greater cash flows and to limit activities that sacrifice cash flows.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132864409","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Idiosyncratic Risk, Risk-Taking Incentives and the Relation Between Managerial Ownership and Firm Value","authors":"Chris Florackis, A. Kanas, Alexandros Kostakis, S. Sainani","doi":"10.2139/ssrn.2114391","DOIUrl":"https://doi.org/10.2139/ssrn.2114391","url":null,"abstract":"In addition to its well-documented alignment effect, managerial ownership can also have value-destroying effects by shifting risk to managers and encouraging risk-substitution; that is, managers with relatively unhedged personal portfolios tend to pass up profitable projects with high idiosyncratic (firm-specific) risk in favor of less-profitable projects that have greater aggregate (market) risk. Using parametric and semi-parametric estimation methods, we examine how managerial ownership influences firm value in light of the trade-off between the alignment and the risk-substitution effects. We find that risk-substitution offsets the alignment effect of managerial ownership in firms that are exposed to severe risk-substitution problems, leading to a weak (or non-existent) association between managerial ownership and firm value. We identify a plausible channel for these effects by showing that firms exposed to risk-substitution exhibit more “conservative” investment and financing policies. We also show that the risk-substitution problem is partially mitigated by the inclusion of stock options in managerial compensation packages. Finally, our findings suggest that semi-parametric methods may prove useful for future studies aiming at capturing nonlinear features in the data.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133420585","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Higher Purpose, Incentives and Economic Performance","authors":"A. Thakor, R. Quinn","doi":"10.2139/ssrn.3350085","DOIUrl":"https://doi.org/10.2139/ssrn.3350085","url":null,"abstract":"How does organizational higher purpose affect employee behavior and firm output? We develop an optimal-contracting model which shows that pursuing organizational higher purpose dissipates agency frictions, lowers wage costs and elicits higher employee effort. The effect on profits, however, depends on whether the authenticity of the firm’s higher purpose matters to employees or they care only about how much the firm invests in that purpose. When authenticity does not matter, the firm’s profit declines with its investment in higher purpose. But when authenticity matters, firm profit is non-monotonic in the commitment to higher purpose. The possibility of agency costs of external finance in some firms creates a negative externality, crowding out higher-purpose investments by other firms, with profits nonincreasing in higher-purpose investments cross-sectionally. When customers and/or investors care about the firm’s higher purpose, the equilibrium wages of employees decline and higher purpose investments by firms increase.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124319086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Value Creation Around Merger Waves: The Role of Managerial Compensation","authors":"D. Hillier, Patrick McColgan, Athanasios Tsekeris","doi":"10.1111/jbfa.12419","DOIUrl":"https://doi.org/10.1111/jbfa.12419","url":null,"abstract":"This paper examines the relation between executive compensation and value creation in merger waves. The sensitivity of CEO wealth to firm risk increases the likelihood of out‐of‐wave merger transactions but has no influence on in‐wave merger frequency. CEOs with compensation linked to firm risk have better out‐of‐wave merger performance in comparison to in‐wave mergers. We also present evidence that cross‐sectional acquirer return dispersion is greater for in‐wave acquisitions. Our results suggest that the underperformance of acquiring firms during merger waves can be attributed in part to ineffective compensation incentives, and appropriate managerial incentives can create value, particularly in non‐wave periods.","PeriodicalId":279731,"journal":{"name":"Corporate Governance: Compensation of Executive & Directors eJournal","volume":"150 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"119333157","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}