CEOs Of Companies Research Articles

The relationship between company size and CEO remuneration: A scaling perspective

The first objective of the study is to empirically test a number of company size determinants’ significance as size proxies in benchmarking CEO remuneration for different sectors of Johannesburg Stock Exchange (JSE)-listed companies. The second objective is to investigate an issue that has not been examined in previous studies, namely the extent to which companies are able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. To fulfil the first objective, data extracted from the McGregor BFA database were obtained for 2013, where 244 companies in four sectors, i.e. financial, manufacturing, minerals and services, are analysed using descriptive statistics and simple regression analysis. From the results obtained, to fulfil the second objective, a data envelopment analysis (DEA) model is built to estimate the technical and scale efficiencies of 231 companies. A hypothesis test was helpful to find that the following determinants can be used as proxies for company size: total assets (including intangible assets); market value of assets; total equity; market capitalisation; revenue; and total cost. The confidence level to which the null-hypothesis is rejected leads to the conclusion that those determinants are on their own suitable proxies that make further investigations into joint determinants unnecessary. Furthermore, the study concluded that the majority of companies are not able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. Therefore, the conceptual theory of scaling is to a great extent rejected, since only nine of 231 companies in the sample investigated could achieve economies of scale. The paper is organised as follows: Section I provides the gap of missing knowledge in the literature as well as the conceptual framework of the study. The data and methodology are described in Section II, after which the results and a discussion thereof are provided in Section III. The study is finally concluded in Section IV.

A study on legal problems concerning issuance of false medical certificates

Today, medical certificates are widely used in society; for example, for school enrollment and employment, as well as for insurance purposes, and military service. In addition, they serve an important judicial function. Criminal and violent acts such as murder frequently occur, and traffic and industrial accidents that cause injury and intrude upon a person’s life are increasing; therefore, the courts and the organizations required to deal with such cases are heavily dependent on medical certificates. Recently, a television program called ‘Madam’s Outgo’, that describes the stay of execution of the wife of a company CEO, became a subject of public debate. The trial of the professor at a famous medical school, who received criticism for his major role in making a stay of execution possible for the wife of the CEO, evokes the importance and social function of such medical certificates. Criminal laws and medical laws institutionalize the important social function of medical certificates and establish regulations designed to prevent the writing of false medical certificates. This paper minimizes the use of legal terminology, concentrating on Supreme Court precedents, so that the main translation problems associated with such legal regulations can be utilized as data of doctors and non-jurists, and focuses its discussion on issues that can be practically discussed. On the basis of a theory of analysis of criminal guilt associated with false medical certificates, this paper suggests that to be guilty of issuing of false medical certificates, the following elements are required to be proved: who (subject), what document (object), how it should be written to be classified as a false medical certificate (behavior), and what subjective facts should be perceived to be guilty of issuing of false medical certificates (intent), besides examining the medical requirements associated with writing medical certificates. It therefore appears necessary for the Korean Medical Association to henceforth systematically review its “Guidelines for Writing Medical Certificates,” written in February 2003, from a legal perspective.

Conscientious Consumerism Project in an Undergraduate Quality Management Class

ABSTRACTThis article describes a “conscientious consumerism” project that involves the student as the consumer to either commend or complain to a company about a recent product or service experience. This activity and presentation helps students develop an understanding of the commendation/complaint management process within organizations while adding realism with the student as the customer. Students initiate communication with an organization and maintain a timeline of all contacts, calls, e‐mails, letters, and visits to the company as they work to resolve or report their issue. The project begins early in the semester and concludes with a final registered, certified letter to the company CEO where students summarize the class project and praise processes or recommend any needed changes. When the project is presented, students learn how organizations manage and process customer feedback and complaints. Students have insightful comparisons of the implementation and execution of such processes within organizations. The project contributes to student learning and understanding of numerous key objectives of quality management including: how quality is managed in organizations, the strategic focus customer feedback can play in organizations, process management, voice of the customer, and benchmarking best compliment/complaint management practices.

Brand Personification through the Use of Spokespeople: An Exploratory Study of Ordinary Employees, CEOs, and Celebrities Featured in Advertising

ABSTRACTPersonifying a brand through the use of a spokesperson is a strategy that some companies use to humanize their brands. Three of the ways that such personification is accomplished in advertising is by ads featuring celebrities, “regular people” (such as everyday consumers or persons employed by the brand), and company founders or CEOs as spokespeople. Using a sampling of representative print ads as stimuli, this exploratory qualitative research probed consumer thinking and perceptions regarding these various approaches to brand personification. It was found that celebrities could magically transport consumers to an idealized place, provided there was congruence between the celebrity and the brand. Ordinary people as spokespeople, when genuinely perceived as “one of us,” could be particularly effective in humanizing a brand and eliciting empathy. Famous CEOs and company founders were revered by many respondents who viewed them as aspirational models: they are ordinary people with an extraordinary story. The implications and limitations of the research were discussed, and some directions for future research were provided.

CEO CHARACTERISTICS AND EARNINGS MANAGEMENT

This study investigates the relationship between the characteristics of CEOs and earnings management among public firms listed on the Indonesian Stock Exchange. The decision on how to manage earnings is in the hands of corporate executives. This study examines if earnings management is affected by the characteristics of company CEOs. Using 265 firms in 2012 as our sample, we find that the shorter tenure, older, and founding family CEOs report lower absolute discretionary accruals. Further, we did not find any association between the CEOs’ gender and earnings management.

Peter Drucker and the wellbeing agenda

Findings – Peter Drucker was undoubtedly the father of the academic discipline of management, not only from a theoretical point of view but also from a practitioner standpoint as well. He influenced management scholars and company CEOs at the same time. He published 39 books and numerous articles in management journals and magazines. He is known for some key concepts, like outsourcing, decentralization, knowledge-based work and the practice of management. What people rarely associate with him, however, was his concern about the wellbeing of employees.

A Practical Approach to the Vexing Issue of 'Risk Appetite'

This white paper is about a very important (but too seldom discussed) enterprise risk management issue that I have encountered as the CEO and CFO of non-financial companies: Just how can a director or executive practically apply the concept of organizational “risk appetite” that figures so prominently in many well known ERM frameworks? I will begin by addressing some basic linguistic and intellectual confusion that underlies this issue, the most important of which is the distinction between risk and uncertainty noted by Knight, Keynes and other writers. After discussing the different sources of uncertainty (variability, lack of knowledge, and the nature of complex adaptive systems), I review the ways we deal with it, as individuals and in groups. Broadly speaking, the net result of these processes is that a corporate director is quite likely to face situations in which the actual degree of uncertainty has been significantly underestimated. Finally, I review what a director can do to accurately assess the extent of uncertainty that is inherent in a strategy, to evaluate the actions taken by an organization to manage it, and to determine if this degree of uncertainty is acceptable to a board, investors, and other stakeholders, given the circumstances facing a company.

Musalmah Sauce: Opt for the Best

This case illustrates how a processed food firm can strategize its business to increase its product sales in a competitive domestic market. Musalmah Food Industries Sdn Bhd (MFI), the manufacturer of Musalmah, a premium quality ready-to-eat sauce, had been facing fierce competition from other manufacturers of domestic and imported products in Malaysia. The intense competition led to a lower domestic sales growth. Musalmah had been retailed mostly at the supermarkets, hypermarkets and big grocery shops with the target to serve mainly the ethnic Malay consumers who traveled overseas and the outdoor types for camping or fishing activities. The sales performance for the past five years (2003 to 2008) showed a continuous increase but on a diminishing growth. Datuk Ibrahim Mohammad, the company's CEO directed his management team to prepare a business proposal to understand how they could increase their domestic sales based on the year 2008 performance. He wanted the business proposal to be ready by 30 April as he had to present it to the company's shareholders during the Musalmah Holding Berhad annual general meeting which had been scheduled for 25 May 2009.

Knowledge protection in knowledge‐intensive business services

PurposeThe purpose of this paper is to examine the issue of knowledge protection in knowledge‐intensive business services (KIBS). In particular, it addresses four research questions: do KIBS firms perceive the necessity to protect their knowledge? If so, do they protect it? What method (or combinations of methods) they typically use? What are the main factors affecting the approaches to knowledge protection adopted by these companies?Design/methodology/approachThe paper illustrates and discusses the findings of a survey of 471 KIBS companies located in the Northeast of Italy and operating in three different sectors: IT Services, Design and Communication, Professional Services.FindingsThe study classifies the types of knowledge protection mechanisms and investigates similarities and differences in knowledge protection between KIBS operating in distinct sectors, having different size, and pursuing different knowledge management strategies.Practical implicationsThe outcomes of the investigation can have some important implications from a managerial viewpoint. In particular, the study provides food for though to both CEOs of KIBS companies regarding the mechanisms of knowledge protection, and to policy makers about the possible public policies that may help companies to protect their competitive knowledge capital without hindering their networks of interaction.Originality/valueThe issue of knowledge protection is relatively new in the literature of KIBS, and findings are quite controversial. In particular, the state‐of‐the‐art research shows that there are some important gaps that the paper tries to fill.

Does China's National People's Congress Matter? The Returns to Office in a 'Rubber Stamp' Parliament

What are the returns to office in an authoritarian parliament? A new dataset shows that over 500 deputies to China's National People's Congress are CEOs of various companies. Entropy balancing is used to construct a weighted portfolio of Chinese companies that matches companies with NPC representation on relevant financial characteristics prior to the 11th Congress (2008-2012). The weighted fixed effect analysis suggests that a seat in the NPC is worth an additional 2.01 to 2.04 percentage points in returns and a 6.92 to 7.46 percentage point boost in operating profit margin in a given year. These micro-level findings buttress cross-national evidence and contribute to an emerging literature on the nature of representation in these institutions.

Adding Webinar Presentations to Equity Internet Crowd Funding Projects: Building Trust Relationships Online

Generally, technological innovations begin in very small niche markets when a tiny group of risk-taking consumers decide to try out a product or service they have never seen before. It is never clear that the innovation will ever reach a larger market because the forces of the status quo, as a result of the survival of the fittest, are always trying to kill the innovation.This is true for crowd funding, where a technological innovation in telecommunications has crossed over into a technological innovation in capital markets, and that crossover now has the force of law in the guise of the JOBS Act.This explanation of the internet’s effect on the private capital market is relevant to the new JOBS Act involving crowd funding. Something in the old private capital market has been made obsolete: the dog and pony show of company CEOs going to angel and venture capital events seeking capital. The internet and crowd funding (the two technologies) have bred a new technological innovation called crowd funding webinars.

'Cheap Talk'? I Think Not

This paper analyses market reactions to public strategic plan presentations by New CEOs of NYSE and NASDAQ companies. Existing research demonstrates that impression management occurs in ambiguous s...

Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges

In this paper, I consider the evidence for three common perceptions of U.S. public company CEO pay and corporate governance: (1) CEOs are overpaid and their pay keeps increasing; (2) CEOs are not paid for their performance; and (3) boards do not penalize CEOs for poor performance. While average CEO pay increased substantially through the 1990s, it has declined since then. CEO pay levels relative to other highly paid groups today are comparable to their average levels in the early 1990s although they remain above their long-term historical average. The ratio of large-company CEO pay to firm market value is roughly similar to its level in the late-1970s and lower than its pre-1960s levels. These patterns suggest that similar forces, likely technology and scale, have played a meaningful role in driving CEO pay and the pay of others with top incomes. With regard to performance, CEOs are paid for performance and penalized for poor performance. Finally, boards do monitor CEOs. The rate of CEO turnover has increased in the 2000s compared to the 1980s and 1990s, and is significantly tied to poor stock performance. While corporate governance failures and pay outliers as well as the very high average pay levels relative to the typical household undoubtedly have contributed to the common perceptions, a meaningful part of CEO pay appears to be market determined and boards do appear to monitor their CEOs. Consistent with that, top executive pay policies at over 98% of S&P 500 and Russell 3000 companies received majority shareholder support in the Dodd-Frank mandated Say-On-Pay votes in 2011.

The Way To The Top: Career Patterns of Fortune 100 CEOs

How have the CEOs of large companies worked their way to the top position? Are there several paths to the top or have most present-day CEOs moved up the ranks in a similar fashion? We examine the e...

A Very Elite Practice: Corporate CEOs and the Politics of Strategy

This paper draws on 59 depth interviews with FTSE100 CEOs and chairmen to extend the literature on strategy-as-practice to the practice of strategy as perceived by large company CEOs. We find that strategy for this group is effectively synonymous with vision and direction and that its practice is discursive and elite, confined to the board and top management team and dominated and very largely possessed by the CEOs themselves, who have a strong personal identification with their strategies. This framing of strategy can be seen both as maintaining the CEO’s power over the organization and as imposed by demands of external and internal communication and accountability and expectations of leadership. Its practical consequence is that CEO and strategy become closely identified and the established difficulties of changing strategy without changing CEO are significantly exacerbated.

Managerial compensation and firm performance: Evidence from corporate spinoffs

In this paper, we study changes in the incentive structure of the CEOs in both parent and spun-off companies, and the effect of managerial incentives on operating performance due to an improved agency relationship between shareholders and managers of both firms after the spinoff. We construct a unique dataset that covers corporate spinoffs between 1992 and 2004. We find a certain level of increase in pay-performance sensitivity of the CEOs of spun-off firms as compared to the CEOs of parent firms. We find that pay-performance sensitivities of both parent and spun-off firms’ CEOs are positively related to the operating performance improvement after the spinoff. Overall, our study provides evidence that improved managerial incentive is a source of gains in spinoffs.

The Executive Turnover Risk Premium

We establish that CEOs of companies experiencing volatile industry conditions are more likely to be dismissed. At the same time, industry risk is, accounting for various other factors, unlikely to be associated with CEO compensation other than through dismissal risk. Using this identification strategy, we document that CEO turnover risk is significantly positively associated with compensation. This finding is important because job-risk compensating wage differentials arise naturally in competitive labor markets. By contrast, the evidence rejects an entrenchment model according to which powerful CEOs have lower job risk and at the same time secure higher compensation.

The gender gap: A quota for women on the board

Law schools and MBA programs have been yielding equal numbers of male and female graduates for 25 years. One would reasonably expect, then, that women would populate Australian boardrooms in large numbers. Yet, only 12% or so of directors are women in Australia and the US, and no more than 3% of public company CEOs or Chairs. Norway, France and Spain have acted to redress their imbalances. They say the only proven method of advancing women into boardrooms in large numbers and in timely fashion is to impose quotas.In September 2012, the Credit Suisse Research Institute reported that public companies with at least one woman on the board handsomely outperform those with none. This is a game changing revelation. Prime Minister Gillard announced soon after that the Australian government is ‘committed to achieving a minimum of 40% of women in Australian Government Board by 2015’ A quota may be the best way of achieving this.

Corporate board attributes and bankruptcy

This paper examines how the composition and characteristics of corporate boards relates to firms' success and solvency; the study here focuses on the question of insolvency. This study finds that both board composition and member characteristics relate to whether or not firms can avoid bankruptcy. Boards have a major role to play in whether or not the company can remain solvent. A more versus less independent board, one which is larger and comprised of older members, has more members currently serving as CEOs of other companies, and whose independent/outside directors own less stock is best positioned to help a firm remain out of bankruptcy. Firms may use the results to custom tailor boards as older members retire and new members are inducted.

AIR POLLUTION: New Rules Proposed for Power Plant Toxics

Coal- and oil-fired power plants are key cogs in U.S. economic development. They’re also major emitters of many toxic substances, including mercury, arsenic, chromium, and dioxins. In an effort to dramatically cut the latter while modestly impacting the former, the U.S. Environmental Protection Agency (EPA) is proposing regulations that would set the first national standards for emissions of toxic substances from about 525 power plants.1,2 The agency estimates that by 2016 the proposed standards, which would regulate 67 toxics, could produce health benefits worth $5–13 (for avoided premature deaths, nonfatal heart attacks, respiratory problems, lost work days, and other health outcomes) for every $1 spent to meet the requirements.1 But Melissa McHenry, spokeswoman for American Electric Power, whose 25 coal-fired power plants serve 5.3 million customers in 11 U.S. states, says the agency is significantly underestimating costs to industry. The new regulations, which are scheduled by consent decree to be finalized by 16 November 2011, would replace a George W. Bush administration regulation that addressed only mercury.3 In February 2008 the U.S. Court of Appeals for the District of Columbia vacated that regulation, deeming it inadequate under the requirements of the Clean Air Act.4 Among the toxics covered in the proposed rule for existing plants are mercury, lead, arsenic, chromium, cadmium, nickel, antimony, beryllium, manganese, hydrogen chloride (HCl), hydrogen fluoride (HF), dioxins, and furans. Additional sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter (PM) standards would be implemented for new plants. The agency says existing plants, which are located in nearly every state and provide 46% of U.S. electricity generation, are responsible for 83% of all airborne selenium emissions, 62% of arsenic, 60% of SO2, 50% of mercury, over 50% of many acid gases (including HCl and HF), 28% of nickel, and 22% of chromium.1,5 The agency says existing technology6 could be used to meet all the proposed standards and that the installed equipment would concurrently reduce SO2, NOx, and PM even in existing plants for which such controls would not be mandated. As part of the new rules, the agency is also proposing mandatory work practices that would lead to optimal combustion and subsequent reductions in toxics such as dioxins and furans. When installed, the EPA estimates the new equipment and operating practices would keep 91% of the mercury in coal from being released into the air and reduce 91% of acid gases and 55% of SO2 from power plants each year. The agency also predicts that implementing the controls will not only prevent 850,000 days of missed work each year but also provide 31,000 short-term construction jobs and 9,000 long-term utility jobs.7 Regarding the toxics parameters, McHenry says, “We don’t have a problem with the proposed limits.” But she is concerned about the time allotted by the EPA to implement necessary controls. Power plant owners and operators would have three years to comply after the regulations are finalized, with the possibility of an additional year in certain circumstances. That’s too tight, she says, especially if about 20% of all plants have to shut down rather than add emission controls, which is what she says the industry is estimating. She says those closures might make it difficult for the remaining plants to meet peak demands. A 15 April 2011 press release issued by Southern Company, which has 4.4 million customers in four Southern states, quotes company head Thomas A. Fanning as saying, “As the CEO of a company that has installed more pollution controls than any other utility, I tell you that this cannot be done in three years.”8 Furthermore, Southern Company spokeswoman Valerie Hendrickson says the toxicity limits may not be achievable. The Clean Air Task Force, an advocacy group that worked to overturn the old rule, is continuing its review of the lengthy proposed rule prior to the public comment deadline of 5 July 2011. “I’m glad it’s as strong as it is,” says senior counsel Ann Weeks. “But the devil is in the details.”