CEO Ownership Research Articles

The sharing through corporate sustainability for improving corporate performance in state-owned firms.

This research aims to investigate the appropriate ownership structure via mediating role of corporate sustainability on corporate performance in state-owned companies of Pakistan by examining the role of organizational governance, agency problems, and current issue of CEO ownership. Most effective theories within the context of the developing country of Pakistan are taken into account and study explores the following issue. First, ownership structure is more effective and could provide major findings in corporate, innovative, and environmental performance. Second, corporate, innovative, and environmental performance is receiving high attention due to the critical business environment in Pakistan. There are many factors that stimulate the significance of the corporate, innovative, and environmental performance. In this phase, the role of CEO and responsibilities towards the company and its performance is analyzed. This study has conducted the theoretical survey in both foreign and home countries. Further, this step is hallmark in providing some countermeasures recommendation for the betterment of state-owned companies of Pakistan. Third is whether the CEOs and shareholders could enhance the corporate, innovative, and environmental performance. Empirical evidence data is collected via structured questionnaire from SO companies operating in the emerging market of Pakistan. In addition, empirical research in this study includes descriptive statistics tests, co-relation test, and analyses generated hypotheses through Analysis of a Moment Structure (AMOS) using structural equation modeling. Our research findings recommend CEOs and top managers to utilize their financial resources in an efficient way to achieve the advantage.

Executive Compensation and Bank Performance in Nigeria

This study provides empirical evidence on executive compensation and bank performance. The objective of this study is to examine the influence director compensation, CEO compensation, chairman’s compensation and CEO ownership on bank performance. This study employed a quantitative and longitudinal research design in which secondary data were collected from the quoted banks in the Nigeria Stock Exchange from 2012 to 2016. Multiple regression technique, descriptive statistic, Pearson correlation matrix, Variance Inflation Factor for multicollinearity and Breusch-Pagan-Godfrey Heteroskedasticity test for heteroskedasticity in the regression results the data analysis are performed using EViews 8.0 econometric software. The empirical results show that director compensation has a negative and insignificant influence on bank performance measured by return on equity, CEO compensation has a positive and a significant influence on bank performance, chairman compensation has a negative and a significant influence on bank performance, CEO ownership has a positive and insignificant influence on bank performance while the control variable, firm size has positive and insignificant influence on bank performance. The study recommended that quoted companies in Nigeria should be more concern of CEO ownership and compensation as it had a negative impact on the performance of the organization. The study recommends that quoted banks in Nigeria should be more concern of chairman’s compensation due to it negative influence on bank performance. The study also suggests that remuneration drive CEO motivation to enhance performance.

CEO Ownership, Risk Management, and Bank Runs at Unlimited Liability Banks during the 1890s

CEO Ownership, Risk Management, and Bank Runs at Unlimited Liability Banks during the 1890s

경영자 구조 변화와 기업가치의 관계: 한국주식시장을 중심으로

This study investigated whether the market response to replacement of CEO was significant according to the CEO structure and the ownership of CEO. The results of this study are as follows. First, as a result of analyzing the market response to the CEO’s structural change, a significant negative market response was showed before the event when it was changed from a co-CEO to solo CEO. Second, in case previous CEO’s performance was good, but CEO was replaced, it showed a significant negative market response. Finally, as a result of considering the CEO structure and ownership of CEO at the same time, there was no significant market response in most cases, but a significant positive market response was found when a solo CEO who owned more than 5% of the stock was replaced by a CEO who did not own more than 5%. This study contributes to providing evidence that market participants have an important understanding of the managerial structure.

Do subsidy increases promote or inhibit innovation? Evidence from Chinese enterprises listed on the SSE STAR Market

PurposeThis study aims to comprehensively investigate the relationship between government subsidies and innovation performance in Chinese enterprises listed on the SSE STAR Market.Design/methodology/approachAn unbalanced sample, covering 285 observations in 215 enterprises listed on the SSE STAR Market from 2019 to 2020, was used to explore the relationships between government subsidies, R&D investment, CEO shareholding and innovation performance. Counterfactual analysis is added for robustness testing.FindingsEmpirical evidence confirms that government subsidies have an inverted U-shaped relationship with R&D investment and innovation performance. Meanwhile, R&D investment is a mediating variable between government subsidies and innovation performance. Moreover, CEO shareholding plays a moderating role between government subsidies and R&D investment. The higher the CEO ownership, the steeper the inverted U-shaped relationship.Practical implicationsThe government should introduce a dynamic mechanism to reasonably control subsidy amounts and strengthen the supervision of subsidy use. Enterprise managers should be aware of how incentives affect the firm’s innovation and implement a coordinated development of government subsidy policies and internal enterprise governance.Originality/valueThis study adds new empirical evidence for the relationship between government subsidies and enterprise innovation performance. The risk incentive provided by stock options is an important micro mechanism to compensate for the lack of government subsidies. The study identifies ways to promote firm innovation based on the synergistic effect of internal and external mechanisms.

CEO Duality, Ownership, and Readability of Financial Statement Footnotes: Some Evidence from Indonesia

This study examines the association between CEO duality, CEO ownership and financial footnotes readability. The data were collected from 1,469 non-financial firms listed on the Indonesian Stock Exchange (IDX) between 2010 and 2018. Using ordinary least squares (OLS) regression, this study unveiled a negative and significant relationship between CEO duality and financial statement footnotes. In addition, the relationship between CEO ownership and financial statement footnotes is positive and significant. Furthermore, this indicates that CEO duality expands the embarrassment and provokes opportunistic behaviour from the CEO to prioritize personal interests by exploiting potential company resources to weaken the independence of the CEO. Hence, the readability of financial footnotes is undecipherable. On the other hand, CEO ownership is more responsible for improving corporate performance, so more financial statement footnotes are readable. Therefore, this study contributes to the literature on seeking the understanding of the readability of a firm's written communication in emerging countries.

An Analysis of Corporate Governance and the Performance of Rural Banks in the Upper West Region, Ghana

The study used the mixed research design in examining corporate governance and rural bank performance in Ghana's Upper West Region. Purposive and simple random sampling techniques were used in the study. A sample size of 48 participants, composed of Bank CEOs/Managers, Board Members, Human Resource Managers, Heads of Administration and Senior Staff of four Banks was used. Questionnaires and interview guides were used for data collection. Data was analyzed both quantitatively and qualitatively. The study found that ownership concentration, audit quality, and board independence are important factors in good corporate governance and are influenced by business size, leverage, and board size, with a P-value of 0.073<0.1. It was also found that good corporate governance proxy by CEO duality, board independence, ownership concentration and audit quality have a substantial impact on rural bank performance. However, with a P-value>0.1, it was discovered that CEO duality has a detrimental impact on excellent corporate governance. Corporate governance challenges the banks face include clients’ default in repaying loans, inappropriate corporate governance practices, high operational costs of the banks and board members’ incompetence and perpetuation in office. The study concluded that corporate governance significantly affects the functioning of rural banks in the Upper West Region. The study recommended a reduction in the tenure of office of directors, putting in place appropriate rules and guidelines for the operations of the boards and ensuring effective checks and balances on the activities of the boards by way of ensuring effective corporate governance practices. Keywords: Corporate, Governance, Performance, Rural Banks, Upper West Region DOI: 10.7176/RHSS/12-16-01 Publication date: August 31 st 2022

Family CEO affect and R&D investments of family firms: The moderation effect of family ownership structure

The last decades have seen increasing interest in the determinants of heterogeneity in family firm innovation. In this study, we respond to recent calls to address the micro-level mechanisms behind innovation in family firms. Specifically, we analyze the effect of family CEO affect, namely positive and negative affective traits, on the R&D investment decisions of family firms. We also analyze the moderating effect of family ownership structure on the influence of CEO affect on these strategic decisions. Consistent with affect maintenance arguments, our findings of a sample of 142 Spanish family firms show that positive family CEO affect negatively influences the R&D investments of family firms, while negative affect positively influences these investments. The results also show that family CEO ownership and family CEO branch ownership strengthen the effects of family CEO affect on R&D investments, whereas ownership concentration in other family branches weakens these effects.

Emotional Dissonance and Affective Organizational Commitment in Family Firm Top Management Teams

This article studies the impact of emotional dissonance experienced in interactions with the CEO on affective organizational commitment in family firm top management teams. We argue that this relationship will be mediated by the level of satisfaction with the CEO. Additionally, we propose that CEO ownership will have a moderating effect. Using a multiple-respondent dataset of 212 top managers from 45 family firms, we find that emotional dissonance leads to less satisfaction with the CEO, influencing the level of affective organizational commitment. This relationship is even stronger if the CEO has a high degree of ownership power.

Sustainable corporate governance for environmental innovation: A configurational analysis on board capital, CEO power and ownership structure

CEOs, boards of directors, and owners are believed to be important actors in affecting environmental innovation. Yet, there is a lack of combined view on the three actors in the literature. This study aims to explore the sources of environmental innovation from the perspective of corporate governance bundles. Considering the interdependent nature of the three, this study proposes a configurational model consisting of CEO (formal and informal) power, board capital (breadth and depth), and ownership (institutional and insider). We undertake a qualitative comparative analysis (QCA) on a sample of 250 dirty firms and discover six sufficient configurations for high environmental innovation. These configurations suggest that there are multiple paths for achieving high environmental innovation. Furthermore, both powerful and weak CEOs can be environmental innovation facilitators if they are accompanied by suitable board archetypes and ownership structure.

Impact of CEO compensation and CEO Power on Firms’ Innovation Moderating Role of Ownership Structure

CEO compensation and power have crucial issues in assessing the innovative culture of firms. To address this issue, this study aims to investigate the nexus between CEO compensation and power on firms’ innovation under moderating role of ownership structure (measured in terms of ownership concentration, business group affiliation and CEO ownership). Ownership structure (ownership concentration, business group affiliation and CEO ownership) enables shareholders to exercise their statutory rights which play a vital role in the strategic decision-making of a company. To test the aforesaid relationship, data has been extracted from 27 chemicals and pharmaceutical firms listed at the Pakistan Stock Exchange during 2013-2021. The data gathered, thus, has been analyzed using various statistical techniques namely: descriptive analysis, correlation analysis, and multiple regression analysis. Due to presence of various issues in data such as heteroscedasticity, auto-correlation and cross-sectional dependence, researcher has employed Panel Corrected Standard Error Model (PCSE). The findings reveal that CEO compensation has positive effect on firms’ innovation. Another interesting finding is that this relationship becomes negative under conditional role of ownership structure (ownership structure, business group affiliation, and CEO ownership) which supports agency theory. However, CEO power has no role in firms’ innovation even under moderating role of ownership structure. The findings offer certain implications for practitioners to fix the compensation of CEO in order to resolve type I and II agency issues, which can improve firms’ innovation. Findings of this study can help investors, policymakers and creditors to understand the importance of CEO compensation and power towards firm innovation in the presence of ownership structure

Chief Executive Officer Attributes and the Value of the Firm: Does Firm Size Play a Moderating Role?

This study seeks to (1) assess the relationship between CEO attributes and firm value, and (2) ascertain the moderating role of firm size in the relationship between CEO attributes and firm value, using a panel research design. This study identifies CEO tenure, CEO turnover, and CEO ownership as CEO attributes, Tobin's Q as a measure of firm value, and the natural logarithm of total assets as a measure of firm size. Data were sourced from the database of Machameratios for the period 2010 to 2019 and analyzed using fixed and random effects regression and structural equation modeling. First, the fixed and random effect result revealed that CEO tenure, turnover, and ownership negatively affect the value of the firm; however, the relationship was only significant for CEO tenure and ownership. Second, the structural equation modeling result showed that while firm size does not play a significant moderating role in the relationship between CEO tenure and turnover and firm value, a significant moderating (negative) effect was found for CEO ownership. The study recommends that since CEO turnover and tenure do not matter to the value of the firm, there is a need to ensure that a CEO’s term in office is not lengthened beyond what is required by tenure legislation, i.e., it should not exceed 4 years. In addition, for larger firms, CEO shareholding should be adequately managed to positively affect the value of the firm.

Power and responsibility: How different sources of CEO power affect firms' corporate social responsibility practices

AbstractDoes greater CEO power come with more responsibility? Previous scholarly work in this field entails divergent results on this question. Based on the upper echelons theory and CEO power literature, this study aimed to explore the mechanisms underlying how different sources of CEO power, including structural, ownership, expert, and prestige power, affect firms’ corporate social responsibility (CSR) practices and whether such relationships are moderated by firm visibility. Using a panel dataset comprising 6604 yearly observations of Chinese publicly traded firms from 2009 to 2019, we found that structural power is negatively related to CSR practices and that expert power is positively related to CSR practices, whereas ownership power and prestige power have no direct relationship with CSR practices. Our results show that firm visibility weakens the negative relationship between structural power and CSR practices and strengthens the relationship between expert power and CSR practices, respectively. Overall, this study reconciles the mixed results of previous studies on the impact of CEO power on CSR and integrates the effect of firm visibility as a contextual factor. This article concludes with practical recommendations on how to manage CSR engagement.

The Association among CEO Overconfidence, Ownership Structure and Financial Performance

This paper explores the relationship among ownership type, managerial overconfidence, and corporate performance. In addition, the purposes of this research are to examine the structure of ownership and CEO overconfidence of family businesses and investigates whether it influences the performance. This study uses a panel estimation to exploit both the cross-section and time–series nature of the data; our sample includes firms listed on Taiwan’s stock market during the period of 2009 to 2018, totally 6,612. These results show that (1) financial performance of family business is worse than that of non-family business. It means that family interests of family business are higher than those of company which lead to exploited; (2) CEO overconfidence of family business is lower than that of non-family business. Family supervision and control can lead to family business managers who depress his (her) own overconfident tendency; (3) the overconfident CEO has poor impact on corporate performance. This means that manager’s overconfident expectations will damage company’s benefits; and (4) after the overconfident CEO joins family business, corporate performance will be increased. It means overconfident manager can compensate for family’s conservativeness and lead to increased corporate performance.

Management connection and firm performance: Evidence from Global Financial Crisis

This study revisits the relationship between the connection CEOs develop with other top executives through appointment decisions and firm performance during the 2008–2009 financial crisis. Contrary to the conventional wisdom that less CEO-independent management team harms firm performance, I document a positive association between management connection and crisis-period stock returns. This baseline finding is robust to various identification strategies with alternative measures of management connection, alternative samples, and placebo tests. Further analyses reveal that the relationship is more pronounced in firms that face more information uncertainty and complex business structure, as well as those with long-connected management teams and high CEO ownership. The evidence suggests that management connection in creating team homogeneity facilitates faster and more decisive actions, which benefit firm performance amid the financial crisis.

Mediating Effects of Accounting Conservatism on The Relationship Between Corporate Governance and Cost of Capital

Mediating Effects of Accounting Conservatism on The Relationship Between Corporate Governance and Cost of Capital

Corporate governance and firm value: a study on European financial institutions

PurposeThe purpose of this paper is to examine the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and ownership structure, on the firm value of European financial institutions.Design/methodology/approachUsing the market-to-book ratio calculated by the Thomson Reuters Eikon ASSET4 database, this study measures the firm value of 111 financial institutions belonging to 12 European countries listed on the stock exchange during the period 2007–2019. Multivariate regression analysis on panel data is used to estimate the relationship between corporate governance attributes, such as board size, board independence, board gender diversity, ownership concentration and CEO ownership, and the firm value of European financial institutions.FindingsThe empirical results reveal that board gender diversity and CEO ownership are positively related to the firm value, whereas board size and ownership concentration are negatively related. Furthermore, the findings suggest that board independence is insignificantly correlated with the firm value. Regarding the control variables, the results show that financial institutions' size, age and legal system are significant factors in changing the firm value. Nevertheless, financial institutions' leverage and activity sector are not significantly correlated with their value.Originality/valueThis research contributes to the literature by providing the significant links between some corporate governance mechanisms and the firm value of companies from the financial industry, by addressing the information gap for this critical industry in the context of a developed market like Europe.

Do CEO Duality and Ownership Concentration Impact Dividend Policy in Emerging Markets? The Moderating Effect of Crises Period

Despite developments of recent theoretical and numerous empirical studies on the policies effectively adopted by companies, the dividend distribution policy (DDP) remains largely unexplained. In this regard, the main purpose of the current study is to empirically examine the effects of both CEO duality and ownership concentration on DDP during a crisis period. Furthermore, we test, using an interaction variable, the moderating effect of the crisis period on the association between both the degree of CEO duality and the ownership concentration on the DDP by analyzing panel data on selected listed firms in an emerging economy, namely, Tunisia. Based on a sample made up of 576 firm-year observations over the period 1996–2019, the findings of this research indicate that the crisis period plays an important role in mitigating the positive effect of both CEO duality and ownership concentration on DDP. The findings confirm furthermore that the crisis period on the one hand and both CEO duality and ownership concentration on the other represent two competing forces influencing DDP. Our results also support the agency theory on which DDP depends, among other things, family ownership, board and company size, and ROE.

The Behavioral Agency Model and Innovation Investment: Examining the Combined Effects of CEO and Board Ownership

The Behavioral Agency Model (BAM) offers a behavioral account of executive incentives, according to which the perceived threats to CEO wealth, that is, CEO risk bearing, influence a CEO’s propensity to undertake innovation investments. While examining stock options extensively, the extant BAM research devotes relatively scant attention to other forms of incentives, such as stock ownership, that are conducive to one source of risk bearing, that is, employment risk. Furthermore, with an emphasis placed on the CEO, much BAM research neglects the interactive risk preferences of the CEO and the board. This study refines the BAM and empirically explores the countervailing forces exerted by the CEO and board ownership. It elucidates that while CEO ownership exhibits an inverted U-shaped relationship with innovation investment, board ownership weakens that relationship. An exploratory test on a sample of 108 Italian manufacturing firms provides support for the hypothesized effects. The refined BAM sheds further light on executive incentives through a behavioral lens, by elucidating the role of stock ownership and the interactive risk preferences of the CEO and the board.

Determinants of CEO Compensation in Malaysia

CEO compensation comprises of lucrative fees, salary, bonuses, and pension scheme. It is an important topic to be studied because evidence indicates that CEO compensation is positively associated with firm performance. Recently, the incidents of CEOs being paid excessively compared to services they do have been reported in both developed and developing countries. This motivates this study to examine the factors determining Malaysian CEOs compensation. The sample of this quantitative study is Top 80 Malaysia public listed companies based on market capitalization. The results of multiple regression analysis on data of 400 observations show that CEO compensation is negatively affected by the level of board of directors’ independence, but not affected by firm performance, CEO ownership and leverage. Additionally, we detect that CEOs with high compensation and low compensation are different in term of their firms’ board independence and leverage. We suggest future studies should at least examine the effect of CEO characteristics like tenure, education and family ownership on their compensation.