Bonus Plans Research Articles

PENGARUH KONFLIK BONDHOLDERS-SHAREHOLDERS, BONUS PLAN, DAN UKURAN PERUSAHAAN TERHADAP KONSERVATISME AKUNTANSI (STUDI PADA PERUSAHAAN MANUFAKTUR SEKTOR INDUSTRI BARANG KONSUMSI TERDAFTAR DI BEI PERIODE 2013-2017)

This study aims to analyze the effect of bondholder-shareholder conflict,bonus plan and firm size on accounting conservatism in the consumer goodsindustry companies on the IDX for the period of 2013-2017. This researchuses quantitative. The population in this study were 38 consumer goodsindustry companies. The sampling technique in this study used purposivesampling, so that a total sample are 35 observations were obtained consistingof 7 companies for 5 years (2013-2017). The method of data analysis used ismultiple linear regression which is processed in the SPSS application. Theresults of the study show that the conflict of bondholder-shareholders effect onaccounting conservatism, while the bonus plan and firm size have no effect onconservatism of accounting. The results of the research simultaneously showthat the bondholder-shareholder conflict, bonus plan and firm size effect onaccounting conservatism.

Dampak Bonus Plans, dan Political Cost terhadap Manajemen Laba Sektor Farmasi

Teknologi sekarang yang semakin lama semakin berkembang ditandainya persaingan kompetitif antar perusahaan baik perusahaan bersifat lokal, nasional maupun internasional sehingga mengharuskan manajemen perusahaan untuk dapat bekerja lebih kerasa dalam menghadapi hal tersebut. Hasil penelitian adalah bonus plans berpengaruh negatif terhadap manajemen laba. Political cost berpengaruh negatif terhadap manajemen laba. Bonus plans dan political cost berpengaruh negatif terhadap manajemen laba.

Bonus Plan Choices During an Economic Downturn

ABSTRACTWe use survey data to estimate the effect of the 2008–2009 recession on three fundamental bonus plan choices. We find robust evidence that the recession (1) reduced incentive strength, (2) increased the relative incentive weight on financial performance measures, and (3) increased the perceived difficulty of financial performance targets, not only in absolute terms but also relative to the perceived difficulty of nonfinancial targets. To assess the extent to which these findings can be explained by standard theoretical explanations, we review prior agency literature and discuss several channels through which an economic downturn can affect firms' bonus plan choices. Our review highlights that contracting issues rarely examined in prior empirical work such as retention concerns and information asymmetry issues are likely to play an important role during an economic downturn.

Why EVA Bonus Plans Failed—and How to Revive Them

Most companies rely heavily on earnings to measure their financial performance, but earnings growth has at least two important weaknesses as a proxy for investor wealth. Current earnings growth may come at the expense of future earnings through, say, shortsighted cutbacks in corporate investment, including R&D or advertising. But growth in earnings per share can also be achieved by “overinvesting”—that is, committing ever more capital to projects with expected rates of return that, although well below the cost of capital, exceed the after‐tax cost of debt. Stock compensation has been the conventional solution to the first problem because it's a discounted cash flow value that is assumed to discourage actions that sacrifice future earnings. Economic profit—in its most popular manifestation, EVA—has been the conventional solution to the second problem because it includes a capital charge that penalizes low‐return investment.But neither of these conventional solutions appears to work very well in practice. Stock compensation isn't tied to business unit performance, and often fails to motivate corporate managers who believe that meeting consensus earnings is more important than investing to maintain future earnings. EVA often doesn't work well because increases in current EVA often come with reduced expectations of future EVA improvement—and reductions in current EVA are often accompanied by increases in future growth values. Since EVA bonus plans reward current EVA increases without taking account of changes in expected future growth values, they have the potential to encourage margin improvement that comes at the expense of business growth and discourage positive‐NPV investments that, because of longer‐run payoffs, reduce current EVA.In this article, the author demonstrates the possibility of overcoming such short‐termism by developing an operating model of changes in future growth value that can be used to calibrate “dynamic” EVA improvement targets that more closely align EVA bonus plan payouts with investors’ excess returns. With the use of “dynamic” targets, margin improvements that come at the expense of business growth can be discouraged by raising EVA performance targets, while growth investments can be encouraged by the use of lower EVA targets.

PENGARUH TARIF PAJAK PENGHASILAN, MEKANISME BONUS, DAN TUNNELING INCENTIVES TERHADAP PERGESERAN LABA DALAM MELAKUKAN TRANSFER PRICING DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

This study aims to examine the effect of income tax rates, bonus plan and tunneling incentives as instruments in detecting income shifting with transfer pricing with moderate good corporate governance. The independent variables in this research are income tax rate, bonus plan and tunneling incentives as well as leverage and firm size as control variables. Good corporate governance mechanism that has been used in this research is audit quality regarding to auditor reputation.The sample was taken by purposive sampling method consisting of 176 manufacturing companies of consumer goods industry sector listed in Indonesia Stock Exchange which have reported complete financial report in period 2013-2016. Test of hypothesis was using SPSS 23 application.The results show that good corporate governance has weaken positive significant for bonus plan and tunneling incentives in detecting income shifting in transfer pricing. Meanwhile, other independent variables income tax rate has no significant effect.

Pengaruh Debt Covenant dan Political Cost Terhadap Konservatisme Akuntansi

This research aims to understand and analyzes the effect of debt covenant, bonus plan, and political cost against company’s accounting conservatism. Independent variable for which used in this research was debt covenant measured by the ratio of leverage, bonus plan measured by company share ownership by managers, and political cost measured by the size of the company.While the dependent variable measured by accounting conservatism. The sample selection is using purposive sampling method, in order to obtain 36 observations of manufacturing company which narrowed to subsector industrial consumer goods and consistently listed at Indonesia Stock Exchange during the period 2012-2015. This research uses secondary data from company financial statements obtained from the Indonesia Stock Exchange. Multiple linear regression technique is used in this research to achieve analytical results. The result showed that debt covenant have negative insignificant effects to accounting conservatism, bonus plan have negative and significant effects to accounting conservatism, and political cost it has positive effects and significantl to accounting conservatism.

The use of nonfinancial performance measures in CEO bonus compensation

AbstractResearch Question/IssueIn this study, we explore the relationship between the use of nonfinancial performance measures in Chief Executive Officer (CEO) bonus plans and CEO power, moderated by compensation committee monitoring. Furthermore, we investigate whether the inclusion of nonfinancial performance measures is associated with higher CEO bonus pay sensitivity to shareholder returns.Research Findings/InsightsUsing a sample of FTSE 350 firms during the period 2007–2013, we find that CEO power is significantly negatively related to the propensity of using nonfinancial performance measures. This negative relationship, however, is moderated by higher levels of compensation committee monitoring. We also find that firms combining nonfinancial and financial performance measures in CEO bonus plans tend to have stronger CEO bonus pay sensitivity to shareholder returns than firms using financial measures alone. Thus, our results suggest that boards of directors adopting nonfinancial performance measures are able to better align CEO incentives with shareholder interests. We find similar results when using the weight of nonfinancial performance measures in the bonus plan in our analyses.Theoretical/Academic ImplicationsThis study empirically supports the managerial power theory whereby powerful CEOs influence the choice of performance measures in their bonus plans. However, effective compensation committees are found to attenuate the influence of powerful CEOs and to better align their interests with those of shareholders. Our result of stronger bonus pay sensitivity to shareholder returns for firms combining nonfinancial with financial performance measures implies that the informativeness of these measures enhances the firm's ability to tie CEO bonus compensation to shareholder wealth.Practitioner/Policy ImplicationsThis study offers insights to members of boards of directors, especially compensation committee members, who are interested in improving the design of executive incentive contracts to better align managerial incentives to shareholder interests. Furthermore, the findings inform regulators about the importance of alternative performance measures in pay‐performance sensitivity and may warrant increased firm disclosure of the details of the pay structure.

The role of executive cash bonuses in providing individual and team incentives

Given CEOs’ substantial equity portfolios, much recent literature on CEO incentives regards cash-based bonus plans as largely irrelevant, begging the question of why nearly all CEO compensation plans include such bonuses. We develop a new measure of bonus plan incentives and show that performance sensitivities are much greater than prior estimates. We also test hypotheses regarding the role of bonuses in providing executives with individualized and team incentives. We find little evidence supporting the individualized incentives hypotheses but find consistent evidence that bonus plans appear to be used to encourage mutual monitoring and to facilitate coordination across the top management team as a whole.

Pengaruh Leverage, Bonus Plan, Ukuran Perusahaan, dan Profitabilitas pada Praktik Perataan Laba

The study was conducted on consumer goods industry companies for the period 2013-2017. The number of research samples is 165 observations chosen by non probability sampling method, namely purposive sampling. The data analysis technique uses logistic regression analysis. Based on the analysis, results can be obtained namely leverage does not affect the income smoothing practice; bonus plan has positive effect on income smoothing practices; company size has negative effect on income smoothing practices; and 4) profitability has no effect on income smoothing practices. The implications of this research can be divided into two types, namely theoretical and practical implications. Theoretical implications that can be a reference source of research relating to income smoothing practices and can support positive keaganen theory and accounting theory, while the practical implication is a consideration for investors in making investment decisions.
 Keywords: leverage, bonus plan, company size, profitability, income smoothing practice

About Optimization Methods Printing Activity

The article considers publication activity of academic and pedagogical workers of the university as an important criterion of the organization and its personnel work. Publication activity is an indirect presentation of results of employees' research work. The review of leading bases of academic citing of Russian authors, including international ones (Web of Scince, Scopus), as international publication activity shows the degree of science development in the Russian Federation in comparison with science in other countries. The article investigates the interrelation of subjective in-university assessment of the author's publication activity and objective positioning of the employee's works in academic community through local indicators of awarding and score rating fixed by the university, which in their turn can become a key administrative way of stimulating publication activity. The optimization task of creating a bonus plan for publications taking into account structural and budgetary constraints, as well as psychosocial aspects of the behavior of authors, was solved.

Tanggung Jawab Sosial Perusahaan dari Sudut Pandang Teori Akuntansi Positif

Tujuan penelitian ini adalah untuk mengetahui pengaruh rencana bonus, rasio hutang, dan biaya politik terhadap tanggung jawab sosial perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia pada tahun 2014-2016. Rencana bonus diukur dengan return on assets (ROA), rasio hutang diukur menggunakan debt to equity ratio (DER), biaya politik diukur dengan total aset perusahaan, sedangkan CSR diukur menggunakan standar GRI G4. Sampel diambil dengan metode purposive sampling, dengan total sampel sebanyak 288 perusahaan. Rencana bonus dan biaya politik berpengaruh positif terhadap tanggung jawab sosial perusahaan, sedangkan rasio hutang tidak berpengaruh terhadap tanggung jawab sosial perusahaan.

Pengaruh Bonus Plan dan Firm Size terhadap Earning Management (Studi Empiris pada Perusahaan Manufaktur di BEI)

This study aims to analyze the effect of bonus plan, and firm size on earnings management. Earnings management is measured using discretionary accruals. The independent variables used in this study are the bonus plan of the board of directors and commissioners, and the size of the company while the dependent variable is earnings management. Several previous studies have shown mixed results. To get valid results, testing is carried out on each variable based on the hypothesis built. The study population is 143 manufacturing companies listed on the Indonesia Stock Exchange. The sample used was selected by purposive sampling method. After reduction with several criteria, 28 companies were identified as samples. The observation period is 2012-2016 years, so the number of samples used is 140 samples. Hypothesis testing is carried out using multiple linear regression analysis, determination coefficient, t test and f test. The results of this study indicate that company size affects earnings management, while bonus plans do not affect earnings management. This study has limitations, namely the bonus plan data used in this study is still in the form of total remuneration received by the board of directors and commissioners, where there are various components such as salaries, benefits, and bonuses. This study does not classify companies based on the size of the company owned by the company, and this research uses only two factors that can motivate earnings management in a company.

Founding conditions and benefit offerings: evidence from US startups

PurposeThe purpose of this paper is to answer the following research question: at the time of founding of a startup, what entrepreneurial conditions would influence the long-term offerings of HR benefits? To answer this question, our study examines the effects of four founding conditions of startups – total assets, founder’s education, industry experience and startup experience – on the basis of the resource-based view of firms.Design/methodology/approachUsing data from the Kauffman Firm Survey (KFS) conducted in the period 2005–2010, this paper analyzed the relationships between the founding conditions and the offering of HR benefits by 4,148 new ventures during the first five years after founding. In addition, this paper examined the relationships of the same founding conditions to the offering of each of seven specific benefits: alternative work schedule, bonus plan, health insurance, paid time off, retirement plan, tuition reimbursement and stock options.FindingsThree conditions at founding – total assets, founders’ education level, industry experience – have a positive and enduring influence on the offering of HR benefits to the employees. Startup experience has a significant effect on benefit offerings during the first year after founding but no significant effect on benefit offerings in subsequent years. All founding conditions have significant and long-lasting positive effects on each benefit, except for startup experience, which has a negative effect on some benefits.Originality/valueThe HRM literature indicates that there has been a surprising gap between practical interest and academic research with regard to benefits. In addition, there is a dearth of research on how entrepreneurs make strategic decisions such as offering benefits to their employees. The study represents an attempt to fill in this gap.

Setting Financial Performance Thresholds, Targets, and Maximums in Bonus Plans

ABSTRACTThis study uses both archival and field evidence from one multidivisional firm to examine how the three commonly used financial performance standards used to calibrate short-term bonus payouts—thresholds, targets, and maximums—are set. The setting of the standards results from complex negotiating processes. Consistent with prior research, we find that performance targets—the middle parameter—are set to be exceeded by most organizational entities. Contrary to some existing normative theory, actual performance is often outside the incentive zone, which is defined by the range between the maximum and threshold. The reasons for this include desires to raise managers' aspiration levels, concerns about bonus payment affordability, and trade-offs in gaining manager commitment to the standards. Often the target is not in the middle of the incentive zone. We identify three additional factors that provide partial explanations of where and why these standards are set where they are: employee risk mitigation, desire for cross-entity equity, and manager operating style.Data Availability: Confidentiality agreements prevent the authors from distributing the data.

The Opportunistic Approach of the Positive Accounting Theory Fails to Explain a Case Study: An Anomalous Situation?

This paper has two objectives: (1) demonstrate that the main accounting choices made by accountants and managers of OGX Company throughout its full business life cycle were not opportunistic as often suggested by the Positive Accounting Theory hypothesis; and (2) demonstrate that these accounting choices may be better explained by the Theory of Corporate Scandals, by the Monitoring Hypothesis and by the Corporate Reputation Hypothesis. The research was conducted using a longitudinal case study approach, from 2006-2015, in order to identify visible accounting decisions in annual financial statements reports. It was found that analyzed Company had the incentives to preform opportunistic accounting choices, such as the ones predicted by the PAT hypothesis and also has experienced several situations in its business life cycle that could have influenced it to perform opportunistic accounting choices. However, there is no evidence that the Company ever made use of opportunistic increasing-income accounting changes to impact their financial debt-covenants and bonus plan, or decreasing-income accounting to avoid government intervention, as suggested by the opportunistic PAT hypothesis. This study extends the literature by providing new additional evidence that companies not perform opportunistic accounting choices in certain contexts, even when there are incentives to do so.

Balancing difficulty of performance targets: theory and evidence

We examine how firms balance difficulty of performance targets in their annual bonus plans. We present an analytical model showing that managerial allocation of effort is a function of not only relative incentive weights but also the difficulty of performance targets. We find that relative incentive weights and target difficulty can either be complements or substitutes in motivating effort depending on the extent to which managers have alternative employment opportunities. To test the predictions of our model, we use survey data on performance targets in annual bonus plans. Our sample of 877 survey respondents consists primarily of financial executives in small- and medium-size private companies where annual bonuses are important both for motivation and retention. Consistent with our model, we find that relative incentive weights are negatively (positively) associated with perceived target difficulty when concerns about managerial retention are high (low). It follows that performance measures included in annual bonus plans have sometimes easy and other times challenging targets depending on their relative incentive weights and retention concerns.

Voluntary Clawback Adoption and the Use of Financial Measures in CFO Bonus Plans

ABSTRACT Firms trade off CFOs' fiduciary duties against their decision-making duties when designing CFO bonus plans. Decreasing bonus incentives tied to financial measures benefits CFOs' fiduciary responsibilities at the expense of motivating their decision-making duties. As prior research indicates that clawbacks increase personal misreporting costs through the loss of previously awarded compensation, we examine whether clawbacks allow firms to increase incentives in CFO bonus contracts. Based on a sample of U.S. firms between 2007 and 2013, we find that clawbacks are associated with greater CFO bonus incentives. We also find the increase in incentives to be more pronounced for CFOs relative to other executives. Our results are moderated by firms' susceptibility to misreporting. The relation between clawbacks and incentives is weaker when firms experienced internal control deficiencies, have larger abnormal accruals, when CFOs are more vulnerable to pressure from CEOs, and when audit committees have less financial expertise and prestige.

Incentives versus Reciprocity: Insights from a Field Experiment

The authors conduct a field experiment in which they vary the sales force compensation scheme at an Asian enterprise that sells consumer durable goods. With variation generated by the experimental treatments, the authors model sales force performance to identify the effectiveness of various forms of conditional and unconditional compensation. They account for salesperson heterogeneity using a hierarchical Bayesian framework to estimate the model. They find conditional compensation in the form of quota bonus incentives to improve performance; however, such compensation may lead to lower future performance. The authors find little difference in effectiveness between a quota bonus plan and punitive bonus plans framed as a penalty for not achieving quota. They find that unconditional compensation, in the form of reciprocity, is effective at improving sales force performance only when it is given as a delayed reward; however, the effectiveness of this plan decreases with repeated exposure. The authors also find heterogeneity in the impact of compensation on performance across salespeople, such that unconditional compensation is more effective for salespeople with high base performance, whereas conditional compensation is equally effective across all types of salespeople.

Founding Conditions and Benefit Offerings: Evidence from U.S. Startups

Benefits are important to employee welfare that can help organizations attract and retain quality employees. Entrepreneurs need to understand the value of human resources and provide competitive benefit packages with limited resources. At the time of founding a start-up, what conditions would influence the offerings of the HR benefits in the long run? To answer this question, our study examines the effects of four founding conditions of start-ups – total assets, founder’s education, industry experience and start-up experience – founded on the theory of the resource-based view of firms. Using the Kauffman Firm Survey (KFS) conducted in the period of 2005-2010, we analyzed the effects of these founding conditions on the offering of HR benefits of 4923 new ventures for the five years after founding. In addition, we examined the effects of these founding conditions on each of the seven specific benefits: alternative work schedule, bonus plan, health insurance, paid time off, retirement plan, tuition reimbursement, and stock options. We discussed these results and their practical implications for entrepreneurs and start-ups.

Optimal Sales Force Compensation in Dynamic Settings: Commissions vs. Bonuses

This paper studies optimal sales force compensation plans in a multiperiod moral-hazard model when the firm wants to implement high effort in every period but only obtains aggregate information on sales. The sales agent chooses effort each period after observing previous sales, and his incentive responsiveness might change over time. The paper derives conditions under which a linear incentive scheme—a pure commission—dominates a bonus plan and vice versa. A commission is optimal if the agent is most difficult to motivate in the last period. Otherwise, combining the commission with a bonus plan can lower the firm’s cost of providing incentives in earlier periods. The results are robust to different types of cost externalities and demand externalities across periods. However, if the firm obtains intermediate sales information, bonus plans dominate commissions. This paper was accepted by J. Miguel Villas-Boas, marketing.