Cash Bonuses Research Articles

ОСОБЕННОСТИ ПРИМЕНЕНИЯ МЕР ПООЩРЕНИЯ К ОСУЖДЕННЫМ, ОТБЫВАЮЩИМ ПРИНУДИТЕЛЬНЫЕ РАБОТЫ

The article discusses the specifics of the application of incentive measures in relation to those sentenced to forced labor. An analysis is being conducted of such incentive measures as taking leave or part of it, leaving the correctional center and a cash bonus. The author pays special attention to the grounds for the use of incentive measures, including the desire to receive education and the active adoption by convicts of measures to compensate for the damage caused by the crime. The need to improve the legal regulation of this area is determined by expanding the grounds for the application of incentive measures and the list of incentive measures. As a result, it was concluded that it is possible to amend Article 60.13 of the Penal Code of Russia.

An Evaluation of Human Resource Practices on Employee Retention in State Corporations in Kenya

Organisations can achieve a competitive advantage by enhancing and expanding human resource knowledge, skills, motivation, and morale. The study aimed to determine the effect of performance management techniques on staff retention at the National Transport and Safety Authority-Kenya. The study focused on 2100 employees working in 15 of Kenya's National Transport and Safety Authority branches. A descriptive research design was used in the study, with a sample size of 336 respondents selected using a stratified random sampling technique. Findings showed that Staff retention is positively correlated with performance management. There was a strong positive correlation (association) (r = 0.725) between performance management and employee retention. The ANOVA findings determined the regression model's significance, from which an f-significant value of P<0.001 was derived, indicating that the model's likelihood (probability) of producing an incorrect prediction is less than 0.001. Management of NTSA-Kenya should appropriately handle aspects of employee relations management, such as HR initiatives, leadership styles, and shared values. They should also provide their employees with rewards in the form of cash bonuses, payments based on performance and pension schemes. Previous research on human resource practices and employee retention has mostly focused on the private sector, leaving a study gap on the effect of these policies on staff retention in Kenyan state corporations such as NTSA. The study, therefore, fills the gap in Knowledge of the performance management practice affecting staff retention.

Reducing the gender gap in parental leave through economic incentives? – Evidence from the gender equality bonus in Sweden

Using a regression discontinuity design, I evaluate an internationally unique policy in Sweden that rewarded equal division of parental leave with a cash bonus. The policy caused a small but significant reduction in the difference in days of leave between the parents. But since parent couples responded in different directions depending on the gender of the person with the lower uptake, the average effect on the mother-father difference in uptake was insignificant. Expectedly, given this result, the bonus did not affect average gender differences in earnings or indicators of later childcare responsibility. However, mothers who lowered their uptake of parental leave in response to the bonus displayed positive point estimates with regard to earnings while mothers who increased their uptake displayed negative estimates. This indicates that we cannot rule out a potential link between the length of parental leave and later allocation of time between home and market production. While the bonus did not affect average gender differences in parental leave and earnings, a key finding is that parents’ division of parental leave can be affected by economic incentives, suggesting that better calibrated bonus programs have potential to be useful policy tools.

Are ESG performance-based incentives a panacea or a smokescreen for excess compensation?

PurposeThis paper aims to examine how the use of environmental, social and governance (ESG) incentives intersects with top management power and various corporate governance mechanisms to affect excess annual cash bonus compensation.Design/methodology/approachThe authors use a novel artificial intelligence (AI) technique to obtain data about ESG incentives use by firms in the S&P 500. The authors test the hypotheses with an endogenous treatment-regression and a contrast test.FindingsWhen the top management team has power and uses ESG incentives, there is a 32% reduction in excess annual cash bonuses implying ESG incentives are an effective corporate governance tool. However, nuanced analyses reveal that when powerful management teams with ESG incentives are from environmentally sensitive industries, have a corporate social responsibility (CSR) committee or have long-term view institutional shareholders, they derive excess bonuses.Practical implicationsStakeholders will better understand management’s motivations for the inclusion of ESG incentives in executive compensation contracts and be able to identify situations which require closer scrutiny.Social implicationsGiven the increased popularity of ESG incentives, society, regulators, boards of directors and management teams will be interested in better understanding when these incentives might be effective and when they might be abused.Originality/valueTo the best of the authors’ knowledge, this study is the first to examine the use of ESG incentives in relation to excess pay. The authors contribute to both the CSR and executive compensation literatures. The work also uses a new methodological technique using AI to gather difficult-to-obtain data, opening new avenues for research.

Were CEO pay cuts during the COVID-19 pandemic merely symbolic? Shareholders' reaction and outrage

We examine whether CEO pay cut announcements during the COVID-19 pandemic are symbolic and made to appease various stakeholders. We find that firms announcing a CEO pay cut are more likely to announce news that has a negative impact on their stakeholders, suggesting that pay cut announcements were used to alleviate stakeholder pressure. We also document that the pay cut announcements are associated with lower CEO salary but not total pay. In fact, our results suggest that pay cut announcements were symbolic, whereby salary cuts were substituted with increases in cash bonuses. Furthermore, we find a lower rate of shareholder dissent votes if a firm announced a pay cut. However, this effect is reduced if the CEO received higher total pay. Finally, we document higher shareholder dissent votes if a firm received government subsidies and paid higher CEO compensation or increased dividends. This suggests that shareholders do not prioritise their immediate financial interests and hold managers accountable for actions perceived negatively by the public.

Exploring the Effect of Cash Bonuses on Employees’ Innovativeness and Creativity in the Nigerian Banking Sector

Employees’ performance is a major concern of organizational leaders, especially those in the human resources department. This paper, therefore, examined the effect of cash bonuses on employees’ innovativeness and creativity in deposit money banks in Nigeria. A self-administered questionnaire was used to source data from a sample of 364 employees working in various categories of nine (9) selected deposit money banks in Lagos State, Nigeria. Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to test the hypothesis. The results indicated that cash bonuses have a significant effect on employees’ innovativeness and creativity in deposit money banks in Lagos State, Nigeria (β = 0.701, t = 27.902, p < 0.05). This finding implied that cash bonuses are an essential driver of employees’ innovativeness and creativity in the Nigerian banking industry. The study recommended that the management of deposit money banks in Nigeria manage their organizational reward system to ensure better employee performance. Finally, the study’s limitations include that the sample used in this study only involved nine deposit money banks in Lagos State. Future research should include other banks in the sector. Moreover, future studies should include additional reward system variables that were not included in the present study.

Corporate Sustainability Reporting and Managerial Agency Problem in Global Firms: A Chicken or Egg?

This paper examines the causality between the managerial agency problem and sustainability reporting of a firm. The research uses the dataset of 621 global corporations based in 31 countries from 2012 to 2018 and the two-stage least square instrumental variable method to analyse the data. The managerial agency problem is proxied by four indicators (i.e., the total assets per sales ratio adjusted by the ratio of CEO salary to country-average CEO salary, the expenditure per sales ratio adjusted by the ratio of CEO salary to country-average CEO salary, the CEO cash bonus to income ratio and CEO perk to income ratio). Corporate sustainability reporting is proxied by Bloomberg ESG scores. The paper reports a significantly negative two-way association between the managerial agency problem and sustainability reporting. The results are consistent across three proxies for the agency problem and hold across robustness check models. The results indicate that the managerial agency problem leads to less sustainability information reported by a firm, which, consequently, makes the managerial agency problem more severe due to a lack of transparency. The study highlights the benefits of sustainability reporting as an effective corporate governance instrument to mitigate the managerial agency problem.

Executive Reward Structure and Financial Performance of Listed Companies in the Nairobi Securities Exchange, Kenya

Studies have reported positive and significant relationship,that is, positive relationship between executive fixed pay, cash bonus, stock options and company’s financial performance; others negative and significant relationship, while others no significant relationship. In view of4this, the4 study4 sought4 to4 establish4 the4 relationship4 between4 executive4 reward4 structure4 and4 financial4 performance4 of4 listed4 companies4 at4 the4 Nairobi4 Securities4Exchange, Kenya. The investigation's precise goals were to establish the impact of executive base pay, bonuses, and non-cash incentives, as well as executive7 stock7options, on7 the7 financial7 performance7 of7 firms7listed7 on7the Nairobi Securities7Exchange7in7Kenya.The research also determined if the rate of inflation had a moderating influence on the association between CEO compensation and financial performance of Nairobi securities exchange-listed businesses. Stakeholder theory, agency theory, marginal productivity theory, and managerial power and governance theory were all used in this research. In this study, the positivist philosophy was applied, as well as a causal research design. The target population was all 65 listed businesses on the Nairobi Securities Exchange in Kenya, and a census was conducted. The research employed panel secondary data from annual financial statements of NSE-listed businesses. The study finding indicated that all the study variables except for inflation had a positive correlation with with financial performance of listed firms. However it is basic pay, bonuses and non cash benefits that had a positive and significant effect on the financial performance of listed firms. The effect of executive share options was positive but insignificant at 5% level of significance. Equally the effect of inflation was negative but insignificant. However, inflation has a signinificant effect as a moderator in the relationship7 between7 executive7 rewards7 and7 financial7 performance7 of7 listed7 firms7 at7 the7 Nairobi7 Securities7Exchange.Its is on the basis on of this findings that the study recommends that listed firms need to tailor their executive compensation and reward schemes to performance to encourage the top executives to continuous work hard and achieve their performance targets. Keywords: Executive reward structure, executive basic salary, executive bonuses, executive non-cash benefits, executive stock options, inflation rate, financial performance.

Rewarding safety performance: Improving safety or maintaining beliefs?

The enduring link between the annual cash bonus and safety metrics that is common practice across the oil and gas industry, and in some other domains, is in part due to job market pressures, and possibly supported by a self-reinforcing belief system. The current study aims to investigate the contemporary annual cash bonus practice in the oil and gas industry from the perspective of the employees and managers, regarding both the perceived value of bonus payments and the influence these have on safety. Forty-eight employees participated in semi-structured interviews in which they described their sense of the impact of the bonus scheme on safety and what could be improved. The results of the case study indicate that only a minority of the frontline properly appear to understand the link between safety performance and their annual bonus payment. Even for those with an understanding, positive safety behaviours are not directly encouraged by the bonus since the incentives are linked to the absence of incidents and are not relevant to the workers’ daily activities. There is strong evidence for a negative impact on incident reporting, both through under-reporting and reclassification of incidents. However, the current practice is considered valuable by the respondents as it signals the importance of safety alongside production and profit. Taken together, the results suggest that the contemporary annual cash bonus practice should be discontinued in the long term because of the limited influence on safety behaviour and potential adverse effect on safety outcomes, simultaneously ensuring that the commitment to safety is communicated through alternative means.

Social exploration: When people deviate from options explored by others.

People often face choices between known options and unknown ones. Our research documents a social-exploration effect: People are more likely to explore unknown options when they learn about known options from other people's experiences. Across four studies (N = 2,333), we used an incentive-compatible paradigm where participants chose between known and unknown options (e.g., cash bonuses). We found higher exploration rates (i.e., choosing of unknown options) when information about known options came from other people, compared with an unidentified source (Study 1a) or a computer (Studies 1b-4). We theorize that the social-exploration effect results from people's tendency to intuitively adopt a group-level perspective with other people: a "we"-perspective. Thus, in social contexts, people explore more to diversify their experience as a group. Supporting this account, we find the effect attenuates in exploration of losses, where people do not wish to adopt a group-level perspective of others' losses (Study 2). Furthermore, the effect is obtained only if others have experienced the outcome; not when they only revealed its content (Study 3). Finally, the social-exploration effect generalizes to everyday choices, such as choosing a movie to watch (Study 4). Taken together, these findings highlight the social aspect of individual exploration decisions and offer practical implications for how to encourage exploration. (PsycInfo Database Record (c) 2022 APA, all rights reserved).

Managerial compensation and fixed intangible assets investment: the role of managerial ownership and firm characteristics

PurposeThis study examines how cash and stock bonus compensations influence top executives to allocate a firm's resources to fixed intangible assets investment and the extent to which this relationship is conditional on executives' ownership, firm growth, internal cash flow and leverage.Design/methodology/approachUsing data from 213 non-financial and non-utility UK FTSE 350 firms for the period 2007–2015, generating a total of 1,748 firm-year observations, panel econometric methods are employed to test the authors’ model.FindingsThe authors observe that executives' cash bonus compensation positively impacts fixed intangible assets investment. However, executives' stock bonus compensation has a negative and significant influence on fixed intangible assets. The authors further observe that executives either cash bonus or stock bonus crucially invest more in fixed intangible assets when the firm has a growth potential. Also, both cash bonus and stock bonus executives in firms with lower internal cash flow spend less on fixed intangible assets. Similar results are also observed for those stock bonus-motivated executives with an increase in fixed intangible assets for low leverage firms but a decrease for high leverage ones.Research limitations/implicationsA key limitation of this study is its concentration on a single country (United Kingdom). Thus, future studies can expand the focus of this study by looking at it from the perspective of multiple countries.Practical implicationsThe practical relevance of the study results is that firms with high growth opportunity in fixed intangible assets activity can use more cash bonus compensation (risk-avoiding incentive) to induce corporate executives to invest more in such activity. This finding is particularly important given the increasing appetite of firms in this knowledge-based economy to create expansion through fixed intangible assets investment. That is, for firms to increase fixed intangible assets investment, this study suggests that executive cash bonus compensation cannot be ignored.Originality/valueWhile this paper builds on the classic Q theory of investment literature, it is the first – to the best of the authors’ knowledge – to explore how cash and stock bonus compensations influence top executives to allocate a firm's resources to fixed intangible assets investment and the extent to which this relationship is conditional on executives' ownership, firm growth, internal cash flow and leverage.

Board Committee Overlap and the Use of Earnings in CEO Compensation Contracts

Using proxy statement data describing the terms of compensation contracts, we examine how overlapping membership between compensation and audit committees influences the use of earnings metrics in compensation. Although research predicts that such overlap could either increase or decrease the reliance on earnings, we find that firms with overlapping directors rely less on earnings-based performance measures in incentive contracts without altering the overall level of performance-contingent cash bonuses. In addition, we provide evidence that firms substitute earnings measures with measures less subject to earnings management. Our findings are robust to potential alternative explanations, extend to an implicit relation between earnings and compensation for a larger sample, and are not driven by the tendency toward an overlapping committee structure more broadly. This paper was accepted by Suraj Srinivasan, accounting.

Impact of managerial incentive structure on operating asymmetries and accruals

AbstractPrior literature acknowledges that, despite its importance in accounting research and practice, there is little understanding of how accruals (i.e., non‐cash component of earnings) behave. To extend the literature on the complex behavior of accruals, this study examines how the asymmetric behavior of accruals is affected by managerial incentive structure. Built upon the agency theory, this study predicts that the “reverse” asymmetric behavior of accruals (i.e., being more sensitive to sales decreases than to sales increases) is mitigated (amplified) when the incentive structure for CEOs relies relatively more on short‐term cash bonus (long‐term incentives). The empirical results based on a sample of 26,183 firm‐year observations for S&P 1500 companies are highly consistent with the prediction.

Does the Chinese version of Bayh-Dole Act promote university innovation?

The Chinese version of Bayh-Dole Act (BD for short) refers to the ownership reform policy for patents arising from government funding research grants. We collected the policies of 31 “985 project” universities from 1998 to 2015 to explore the impact of the Chinese BD. Empirical evidence suggested that patent applications, patent approvals, patent durations, patent citations, and profits from technology transfer of the universities adopting the BD policy had increased significantly. The BD policy encouraged more researchers to disclose and commercialize their inventions and to pursue global patent filing strategies. Compared with the BD policy, the incentive effect of subsidies, tenure promotion and cash bonuses were relatively limited.

Executive bonus compensation and financial leverage: do growth and executive ownership matter?

PurposeThis study aims to examine the impact of executive bonus compensation on a firm’s financial leverage policy and the extent to which this compensation–leverage relation is moderated by firm growth and executive ownership.Design/methodology/approachUsing data from 213 non-financial and non-utility UK FTSE 350 firms for the period 2007–2015, generating a total of 1,784 firm-year observations, panel econometric methods are used to test the model.FindingsDrawing insights from agency theoretic view, this paper uncovers that managerial cash bonus compensation is negatively and significantly related to financial leverage. However, stock bonus compensation has a positive and significant impact on leverage. This study also observes that compensation–leverage is moderated by both firm growth and executive ownership. The results remain robust to alternative econometric models.Originality/valueWhile this paper builds on the risk-motivated argument of executive bonus compensation literature, it is the first – to the best of the knowledge – to explore the bonus compensation-corporate financial leverage and, particularly, examine the extent to which firm growth and corporate executive ownership matter in this relationship.

Operating Cash Flows and Earnings Target Revision: Evidence from Annual Cash Bonus Plans for CEOs

ABSTRACTWe empirically examine the impact of operating cash flows on future earnings targets in CEOs' annual cash bonus plans. Using target and actual compensation earnings-per-share disclosed in proxy statements of large U.S. public firms, we find operating cash flows have no significant incremental effects on the revision of future earnings targets in the presence of current earnings. We observe a positive association between future target achievability and current operating cash flows, indicating that firms with higher operating cash flows set significantly easier future earnings targets for CEOs. These findings suggest that the higher persistence of operating cash flows in predicting future earnings is not fully incorporated into target setting. Further analyses reveal that the positive association between future target achievability and current operating cash flows is attributable to both expectation bias and contractual considerations to reward CEOs who deliver greater cash flows and to limit activities that sacrifice cash flows.Data Availability: Data are publicly available from sources identified in the article.JEL Classifications: M41; J33.

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Better Dividend Policy Effects Share Price Volatility: An Empirical Study on Automobile Sector of Pakistan

This study aims to find out the impact of dividend policy on stock price volatility in the automobile sector of Pakistan. Dividend policy is a deliberate managerial action to share the portion of earnings to shareholders in the form of cash dividend, bonus or script dividend, and repurchased stock. Paying dividends is extremely important fora company’s valuation which practically translates to capital gain in share prices, and wealth maximization of shareholders. This study used the data of seventeen Pakistan Stock Exchange (PSX) listed companies of automobile sector for the period of 12 (twelve) years ranging from 2005 to 2016. The empirical results show that Earning per Share (EPS) and Dividend per Share (DPS) have significant positive impact, but Dividend Yield (DY) and Dividend Payout Ratio (DPR) have negative insignificant impacton Share prices. The study recommends a consistent policy of dividend payment to increase the level of gain on share prices keeping in view the nature of local investors.

COVID-19 and the march 2020 stock market crash. Evidence from S&P1500

This paper investigates the US stock market performance during the crash of March 2020 triggered by COVID-19. We find that natural gas, food, healthcare, and software stocks earn high positive returns, whereas equity values in petroleum, real estate, entertainment, and hospitality sectors fall dramatically. Moreover, loser stocks exhibit extreme asymmetric volatility that correlates negatively with stock returns. Firms react in a variety of different ways to the COVID-19 revenue shock. The analysis of the 8K and DEF14A filings of poorest performers reveals departures of senior executives, remuneration cuts, and (most surprisingly) newly approved cash bonuses and salary increases.

Researchers rewarded for null results

Publishing null results and replication studies will now get Max Delbruck Center for Molecular Medicine and Charite University Hospital researchers a small cash bonus of €1,000 ($1,080) in their research funding. The cash incentives are part of a “behavior change experiment” at the two institutions, which are both members of the Berlin Institute of Health (BIH), to promote research integrity. BIH researchers also have access to electronic tools to assist with the effort, including an app to help researchers work out where to publish their nonstandard results. The two institutes also consider research practices such as publishing null results and open data when they evaluate scientists for funding, hiring, and tenure, says Ulrich Dirnagl, director of the BIH’s QUEST (Quality, Ethics, Open Science, Translation) Center for Transforming Biomedical Research. The BIH founded QUEST in 2017 to improve the value and usefulness of its biomedical research, and the approaches taken over