Determinants Of Executive Compensation Research Articles

Determinant of Executive Compensation (Evidence from Indonesian Banking)

Determinant of Executive Compensation (Evidence from Indonesian Banking)

Determinant of Executive Compensation (Evidence from Indonesian Banking)

The Covid-19 pandemic, in addition to having an impact on Indonesia's economic growth which is a minus, also has a negative impact on almost all industrial sectors in Indonesia. One of the industrial sectors under pressure is the banking sector. The decline in the performance of the banking company will affect the company's profitability. There are many things that will be done by the principal to make efficiencies related to all kinds of expenses, one of the components that can be reviewed is the amount of executive compensation. This study aims to analyze the effect of ROA, credit growth, growth of third-party funds, NPLs, and Covid-19 on the amount of executive compensation for banking companies listed on the Indonesia Stock Exchange in 2018 to 2021. This research is a quantitative study that uses the puposive sampling method. The results of the study found that ROA, credit growth, and company size were able to influence the amount of executive compensation for banking companies in Indonesia. Meanwhile, the growth of deposits, NPLs, and the Covid-19 pandemic did not affect the amount of executive compensation for banking companies in Indonesia.

Determinants of Executive Compensation

The object of this research focuses on executive compensation, which is a form of appreciation for the agent’s contribution as the party responsible for the company performance and the improvement of the walfare of the principals. The aims of this study is to determine the effect of profitability and leverage on executive compensation in non financial companies listed in Indonesia Stock Exchange for the period 2017 – 2019. Population of this study is non financial companies listed in Indonesia Stock Exchange for the period 2017 – 2019 with a sample by non financial listed in Kompas100 index to represent the existing population. Independent variables used in this study are profitability which is measured by return on assets (ROA) and leverage which is measured by debt to equity ratio (DER). Dependent variable used in this study is executive compensation which is measured by total remuneration of president director. This study also used control variables such as executive age, executive gender and executive tenure. The sampling method of this study is a purposive sampling. The research model used is panel data with fixed effect model approach. The findings have shown that profitability has a negative significant effect on executive compensation. It is also noted that the lower level of the company’s debt, the larger the amount of executive compensation. These findings shed the light on research on agency theory that compensation on performance is not valid in Indonesia.

International differences in the CEO gender pay gap

AbstractResearch question/issueThis study examines (i) whether and to what extent differences in the level of compensation paid to men and women can be observed at the corporate executive (i.e., CEOs) level in an international setting and (ii) whether and how country‐level attitudes toward gender equality help explain the heterogeneity in the CEO gender pay gap observed across countries.Research findings/insightsUsing executive compensation data from 27 countries over the 2001–2016 period, this study documents a 3.3% average difference in the level of executive compensation between male and female CEOs in countries around the world. The results further indicate that firms that transition from a male to a female CEO tend to have a significantly lower level of compensation. These results are robust when controlling for an array of key CEO attributes including education, age, and work experience and when US firms are excluded from the sample. Our findings also suggest that attitudes related to gender equality across countries can be an important factor explaining the CEO gender pay gap observed in our study.Theoretical/academic implicationsThe results of our study suggest the existence of a CEO gender pay gap at the international level. Specifically, our study suggests that the difference in pay between men and women, which is well documented in the literature of many countries, not only applies to regular employees in an economy but can also be generalized to those who work at the chief executive level. More importantly, our study suggests that a country's institutional environment vis‐à‐vis gender equality can contribute to the gender pay differences observed in various countries around the world.Practitioner/policy implicationsWe provide evidence supporting the existence of a gender pay gap using executive compensation data at the CEO level. We further show that country‐level institutional characteristics related to gender equality partly contribute to gender pay differences between male and female CEOs across countries. Thus, the findings of our study provide new insights into the potential determinants of executive compensation (i.e., CEO gender and country‐level gender equality) and are valuable to policymakers in proposing legislative changes to reduce the gender pay gap.

Corporate Governance in the Hospitality and Tourism Industry: Theoretical Foundations and Future Research

Although the importance of effective corporate governance for firm performance is recognized by scholars across hospitality and tourism (HT) as well as finance and general management fields, there seem to be several gaps, mixed findings, and conflicting results. To facilitate scholarly advancement, identify gaps in the current knowledge base, make suggestions for theory development, and provide direction for future research, we undertake a systematic review of research on corporate governance in the HT literature. Based on 120 peer-reviewed articles published since 1961, we identify 21 themes explored by scholars, and find that topics related to institutional ownership, determinants of executive compensation, board size, and merger and acquisition outcomes are commonly examined, whereas topics related to family ownership, debt, and regulation/law are seldom explored. Our comprehensive review contributes to the literature by synthesizing current knowledge and offering suggestions to scholars to extend corporate governance literature published in the HT field.

보험회사 경영자 보상의 결정요인에 관한 연구

보험회사에서 경영자보상은 경영자들이 중장기적으로 수익을 창출하고 기업가치 향상에 기여할 수 있는 역량과 노력을 효과적으로 이끌어 장기적인 성장과 발전을 위한 중요한 요소로 작용할 수 있다. 본 연구는 국내 보험회사의 경영자보상에 관한 데이터를 활용하여 보험회사의 경영자 보상체계의 결정 요인에 관한 실증분석을 수행한다. 분석결과, 국내 보험회사에서 기업특성뿐 아니라 기업지배구조와 같은 다양한 요인들이 경영진의 보수의 결정에 영향을 미치고 있으며, 생명보험회사에 비해 손해보험회사에서 기업지배구조와 관계된 요인들이 경영진의 성과급 결정에 영향을 미치고 있다는 사실을 보여주었다. CEO 보상의 결정요인에 대해서는 생명보험회사에서는 회사의 특성변수가 CEO 보수에 주로 영향을 미치는 반면 손해보험회사에서는 회사의 특성 뿐 아니라 기업지배구조와 CEO의 인적특성과 같은 다양한 요소들이 보수의 결정에 영향을 미친다는 사실을 발견하였다.

The Determinants of Executive Compensation in US REITs: Performance vs. Corporate Governance Factors

ABSTRACTThe paper examines whether executive compensation packages within the US REIT industry are determined merely by performance or also by CEO power mechanisms that have an essential influence on board-level negotiations. We offer original insights into management compensation arrangements during and after the financial crisis. The relative importance of cash bonuses in CEO compensation contracts has more than halved after the crisis. Simultaneously, after the financial crisis, equity-based compensation became increasingly important. Concerning the pay-for-performance link, our results show no relationship during the financial crisis. However, after the crisis, we find a strong significant link between remuneration packages and corporate success.

Determinants of executive compensation in South African state-owned enterprises

This research explores the determinants of executive compensation in South African state-owned enterprises (SOEs). A quantitative research approach wasfollowed and secondary data analysis was carried out. The target population consisted of 222 executives in 21 SOEs. This research has shown that the size of the organisation, type of industry and job function can be considered significant and positive determinants of executive compensation in South African SOEs. The findings of the present research also show that demographic characteristics are not significant determinants of executive compensation and should therefore not be taken into consideration when determining executive compensation in South African SOEs.

Determinants of Executive Compensation in Zimbabwe: Evidence from Zimbabwe Stock Exchange Listed Companies (2009 To 2016)

Determinants of Executive Compensation in Zimbabwe: Evidence from Zimbabwe Stock Exchange Listed Companies (2009 To 2016)

Perceptual Determinants of Executive Compensation: Survey-Based Evidence from India

Ensuring effective and fair determination of executive compensation is complex, though equally essential for protecting the interests of shareholders and in creating long-term corporate value. The present study attempts to unravel the perceptions of executives and investors in terms of the determinants on which executive compensation ought to be based in the context of corporate India. The main research instrument is a quantitative questionnaire through which the responses of 74 top executives and 55 investors have been examined. Results highlight statistically significant mean differences in the perception of executives and investors with regards to the determinants of executive compensation. Further, the underlying dimensions representing pay determinants vary for executives and investors with the former regarding corporate governance and human capital as important, while the latter emphasising on the primacy of ownership and leverage. The article offers valuable insight as it proposes a comprehensive set of determinants of executive compensation by integrating multiple theoretical perspectives.

Executive compensation: influence and reciprocity effects

PurposeThe purpose of this paper is to understand the effects of influence and reciprocity as the elements in the determination of executive compensation.Design/methodology/approachA purposive sample was drawn, which comprised of 13 respondents chosen for their expertise relating to the determination of executive compensation in state-owned enterprises (SOEs). A semi-structured interview guide was used as the data-gathering instrument. A thematic analysis technique was used for data analysis.FindingsThe findings in this study identified three themes resorting under influence as crucial in the process of determining executive compensation, namely an executive’s social capital, intellectual capital and social comparison. Two major themes emerged under reciprocity, namely the pay-performance relationship and role complexity. Finally, the political-symbolic role emerged as the main theme that described the relationship between influence and reciprocity.Practical implicationsThe findings provide a more detailed description of the process involved in determining executive compensation in SOEs.Originality/valueThere has been limited if any, empirical study on the process involved in setting executive compensation. The limited focus has always been on accounting measures. Incorporating the socio-psychological view attempts to provide a more comprehensive and conclusive explanation of the process of determining executive pay in theory and practice.

Post‐IFRS Revaluation Adjustments and Executive Compensation

AbstractInternational Financial Reporting Standards (IFRS) allow firms to record adjustments (gains or losses) from the revaluation of investment properties in their income statements. After Hong Kong adopted IFRS in 2005, property companies were required to move their revaluation gains and losses (RGL) from equity to income. We find RGL to be a significant determinant of executive compensation in these firms after 2005, but not before. We further find evidence that the RGL‐compensation association is driven by firms with relative weak corporate governance structure, such as firms in which the controlling shareholders own a relatively small percentage of shares, firms in which the controlling shareholders have control rights that exceed ownership rights, and firms that are no longer run by their founders.

Position, Power and Demand for CEOS: Understanding Executive Compensation in the U.S Market

It is hard to explain dramatic increase in executive compensation using existing theories based on power or position (Frydman and Jenter (2010)). We attempt to address this issue by using CEO promotion, as chairman of the board, as our identi cation strategy. CEO promotion is expected to have signifi cant increase in both position and power hence it is easy to control any unobservable factors associated with power and position. We observe 32,033 CEO-years of publicly listed rms in the US market during the period 1996-2011 and fi nd that, after controlling for observable position and power proxies, compensation of promoted CEOs, that is over and above their peer group CEO chairmen appointees, is mainly explained by contemporaneous peer group compensation shocks in CEO labor market. Our result suggests that market-speci fic peer group compensation in the U.S CEO labor market is more important determinant of executive compensation than fi rm-speci fic position or power. Our results have an important implication for recently introduced CEO-employee pay ratio regulation in the U.S market which uses firm-specifi c information that is attributed to power and position. Our results suggest that executive compensation is beyond their power and position and regulators should consider even CEO labor market forces.

CEO power, ownership structure and pay performance in Chinese banking

This paper examines the determinants of executive compensation in Chinese banking during 2005–2012. Using the fixed effects panel, 2SLS and dynamic GMM regressions, I find that there is no significant positive pay performance relation, and CEO power does not necessarily exhibit higher levels of executive compensation. However, I show that ownership structure (measured by ownership concentration and ownership identification) and compensation committee are significant in determining executive compensation in Chinese banking. It suggests that government may ensure efficient monitoring functions when the pay incentive is ineffective. The results have important implication on bank regulation and corporate governance in emerging markets.

The political determinants of executive compensation: Evidence from an emerging economy

In regulated economies, corporate governance mechanisms such as executive compensation are less driven by market-based forces but more subject to political influence. We study the political determinants of executive compensation for all listed Chinese firms in the context of an exogenous shock that removed market frictions in share-tradability. Under strong political constraints, state ownership reduced the managerial pay levels and increased pay-for-performance sensitivity (to asset-based benchmarks). Board independence and compensation committees do not curb managerial pay, and market-based factors do not have a significant influence. However, these effects reversed following the governance shock (removal of market frictions in share tradability).

Executive compensation: executive attributes and group decision-making effects in South African state owned enterprises

Executive attributes and group decision making effects are explored in the determination of executive compensation. A purposive sample was drawn, which comprised 20 respondents chosen for their expertise relating to executive remuneration in South African state-owned enterprises (SOEs). The study was carried out by conducting primary data collection through one-to-one interviews. Thematic analysis technique was utilised for data analysis. Findings in this study describe executive compensation as a fit between executive attributes and organisational strategic objectives, and multi-perspective engagement of all critical stakeholders of the organisation which includes internal and external sources.

Post-IFRS Revaluation Adjustments and Executive Compensation

International Financial Reporting Standards (IFRS) allow firms to record adjustments (gains or losses) from the revaluation of investment properties in their income statements. After Hong Kong converged to IFRS in 2005, property companies were required to move their revaluation gains and losses (RGL) from equity to income. We find RGL to be a significant determinant of executive compensation in these firms after 2005, but not before. We further find evidence that the RGL-compensation association is consistent with the prediction of management opportunism. First, the level of compensation is not penalized by revaluation losses. Second, the RGL-compensation association is significant among firms with more severe agency problems, such as firms in which the controlling shareholders own a relatively small percentage of shares, firms in which the controlling shareholders have control rights that exceed ownership rights, and firms that are no longer run by their founders.

Executive compensation in health care

Despite continued scrutiny over executive earnings in the health care industry, the evidence for executive pay determinants is uncertain and inconclusive. Theoretical motivations for executive compensation practices have been debated, and questions remain about the explanatory power of previously applied theoretical models. Our systematic review considered evidence of executive compensation determinants among health care organizations and sought to identify factors affecting executive pay that are commonly supported by previous studies. We also aimed to survey the theoretical perspectives employed in health care executive compensation studies to address how organization theory may explain executive remuneration practices at health care organizations. Twenty-one eligible studies were identified after a search of the MEDLINE/PubMed and CINAHL electronic reference databases and the reference lists of relevant studies. Eligible studies included those examining health care organizations and providing empirical, regression-based outcomes regarding the determinants of executive compensation. Each eligible study was coded to identify pertinent information, including study settings, executive compensation measures, executive compensation determinants and their measures (e.g., financial performance measured as profit margin), outcomes (direction and level of statistical significance of regression model coefficients), and theoretical applications. Studies are mixed in their findings regarding the statistical significance of various determinants of executive compensation. Many studies indicate that, in addition to firm financial performance, other factors may influence health care executive compensation, including organizational size and human capital attributes. Agency theory was the predominant framework applied, yet the findings suggest a complementary theoretical perspective may better explain health care executive compensation. To address critics who assert health care executive compensation levels are not consistent with organizational performance, health care organization CEOs, board members, and consultants would benefit to carefully consider and effectively communicate the numerous factors influencing executive compensation beyond firm financial performance.

The Reference Point Effect on Executive Compensation -- A Behavioural Approach

We study Chinese executive compensation by fully addressing the impact of reference point on executive compensation design from behavioural approach. We find the Chinese executive pay setting is heavily influenced externally by the pay level of their peer groups, internally by the other executives within firms and by their own pay level in the previous period. We also find that the integrated effect of the three reference points on executive pay settings is stronger than for each individual reference point. Therefore, our study provides empirical evidence from the perspective of emerging markets to support the application of reference point theory on executive pay setting. We demonstrate that the behavioural-orientated approach provides a more robust explanation on the determinants of executive compensation in addition to the performance-link.

Does executive compensation reflect equity risk incentives and corporate tax avoidance? A Japanese perspective

This study examines corporate tax avoidance as a determinant of executive compensation on the basis of equity risk incentives. Previous research shows that equity risk incentives motivate managers to make more risky, but positive net present value—investment decisions. Through correlation analyses, this study demonstrates that the tax risk measures adopted in this study are negatively associated with both the adoption of stock options and tax aggressive measures. Through multivariate analyses, this study demonstrates that executive compensations are significantly associated with our measures of tax risk positions despite the inclusion of several control variables. Moreover, this study finds consistent evidence that executive equity risk incentives are significantly associated with aggressive tax positions, regardless of the estimation method and the strength of the corporate governance function, and across several tax risk measures.