Effect Of Executive Compensation Research Articles

The Effect of Executive Compensation on the Performance of Listed State-Owned Highway Companies

Listed state-owned highway companies face problems such as low operational efficiency, a fixed operation period, and a limited scale of road assets. This paper presents the current situation of listed state-owned highway companies and analyses the mechanism of executive compensation and cooperate governance based on principal-agent theory, management power theory, and Maslow’s hierarchy of needs theory. The research constructs the index assessment system, selects the data of 20 listed state-owned highway companies from 2012 to 2021 as samples, and applies the principal component analysis (PCA) to measure the comprehensive performance of listed state-owned highway companies. Using a fixed-effects panel model, the impact of executive remuneration on corporate performance is examined along three dimensions: executive monetary compensation, executive pay gap, and executive on-the-job consumption. The research proposes recommendations to address the problems of executive compensation system, with a view to improving corporate performance in listed state-owned highway companies.

Estimation of bargaining effect in the decision of monetary compensation of executive in investment bank: Evidence from China.

Though numerous empirical and theoretical studies have been conducted on the determinants and effects of executive compensation, empirical evidence regarding the bargaining effect on the monetary compensation decisions of executives, especially in a large emerging economy such as China, remains scarce. In this study, a two-tier stochastic frontier and endogenous correction model was developed to quantitatively estimate the bargaining effect on the monetary compensation decisions of investment bank executives. Our study is the first to provide comprehensive empirical evidence that bargaining between investment banks and executives in China significantly affects the compensation decisions of executives. In the bargaining process, investment banks are more proficient than executives, and the comprehensive bargaining effect tends to lower the negotiated compensation of executives. The bargaining effect exhibited obvious heterogeneity in the characteristics of executives and investment banks. When these characteristics tend to augment the bargaining power of executives, the negotiated compensation exhibits a limited decrease; when these characteristics augment the bargaining power of investment banks, the negotiated compensation decreases substantially. Our results provide deep insight into factors that determine executive compensation and help compensation designers of investment banks better understand and design executive pay packages.

Executive compensation and corporate risk management

AbstractWe provide the first evidence on the effects of executive compensation on corporate risk management for insurers. Our unique data set allows the construction of a new, more complete measure of corporate risk management behavior. Specifically, we include hedging‐driven usage of not only derivatives but also insurance. To address potential endogeneity, we utilize a difference‐in‐differences approach, based on the implementation of FAS 123R that required firms to expense stock‐based compensation at fair value. We find that the decline in the convexity of executive compensation following FAS 123R led firms to significantly increase corporate risk management, primarily through increased demand for insurance.

The Effect of Executive Compensation, Capital Intensity, Institutional Ownership, and Family Ownership on Tax Avoidance with Audit Quality as a Moderating Variable in Manufacturing Companies Listed on the Indonesia Stock Exchange of 2016-2020

This study aims to determine whether executive compensation, capital intensity, institutional ownership, and family ownership affect tax avoidance. This study also aims to determine whether audit quality as a moderating variable can moderate the relationship between executive compensation, capital intensity, institutional ownership, and family ownership on tax avoidance. The population used in this study were all manufacturing companies listed on the Indonesia Stock Exchange for the 2016-2020 period. Sample selection was made by using the purposive sampling method. The number of samples in this study was 12 companies, so 60 research observations could be obtained. Data processing was carried out using the R Studio program. The results showed that: (1) Capital intensity has a partially positive and significant effect on tax avoidance, (2) Partial family ownership has a negative and significant effect on tax avoidance, and (3) Executive compensation and institutional ownership partially have no significant effect on tax avoidance, (4) audit quality is partially able to moderate the relationship between capital intensity and tax avoidance, but partially audit quality is unable to moderate the relationship between executive compensation, institutional ownership and family ownership on tax avoidance. Keywords: Executive Compensation, Capital Intensity, Institutional Ownership, Family Ownership, Tax Avoidance, Audit Quality.

The Threshold Effect of Executive Compensation on Corporate Environmental Responsibility: Based on the Moderating Effect of Industry Competition

In recent years, the relationship between the executive characteristics and corporate environmental responsibility has attracted much attention from academia, especially the relationship between executive compensation and corporate environmental responsibility. Based on the panel data of China’s Shanghai and Shenzhen A-share listed manufacturing companies from 2006 to 2018, this paper empirically tests the threshold effect of executive compensation on corporate environmental responsibility and explores this relationship under the moderation of industry competition. The results show the following: (1) The impact of executive compensation on corporate environmental responsibility represents a U-shaped threshold effect; that is, the promotion of corporate environmental responsibility by executive compensation only appears after reaching a certain boundary. (2) Industry competition has a positive moderating effect, which will shift the inflection point of the U-shaped curve between executive compensation and corporate environmental responsibility to the left. (3) Executive compensation of companies of different attributes, sizes, and regions has an impact on corporate environment responsibility, and industry competition has a varying impact on executive compensation and corporate environmental responsibility. This paper is based on the special situation of China and can be used for reference to other developing countries. This study not only expands the research perspective of corporate environmental responsibility and further reveals and verifies the manager effect in the field of environmental performance, but also has practical significance to further give full play to the incentive effect of compensation on corporate non-financial performance.

The Effect Of Executive Compensation And Board Of Director’s Gender Diversity To Tax Aggressiveness

This study aims to examine the influence of executive compensation and board of director’s gender diversity on tax aggressiveness the companies. This study utilizes quantitative method and multiple linear regression as statistical testing. This study is uses secondary data from companies financial reports and annual reports. Population in this study is manufacturing companies listed on Indonesia Stock Exchange in 2015-2019. Research samples were selected using purposive sampling method with 447 companies were considered to fulfilling the criteria. This study utilizes SPSS version 26 program as the processing data tool. The result of this study shows that executive compensation significantly and negatively influences the tax aggressiveness, while gender diversity doesn’t have any significant influence on tax aggressiveness.

Pengaruh Pengungkapan Pajak Dengan Agresivitas Pajak Sebagai Variabel Moderasi Pada Perusahaan LQ-45

This study aims to determine the effect of Executive Compensation and Corporate Social Responsibility Disclosure on Tax Disclosure with Tax Aggressiveness as a mediation variable on LQ-45 companies listed on the Indonesia Stock Exchange during 2016-2019. Sample was selected using purposive sampling method and the valid data was 31 companies. Data processing techniques using multiple regression analysis what helped by SPSS program (Statistical Product and Service Solution) for Windows released 23 and SmartPLS version 3.3.2. The results of this study indicate that executive compensation has a negative and significant influence on tax disclosure while corporate social responsibility disclosure has not influence on tax disclosure, tax aggresiveness has not influence on tax disclosure, executive compensation has not influence on tax disclosure through tax aggresiveness and corporate social responsibility disclosure has not influence on tax disclosure through tax aggressiveness.

Executive Compensation, Disclosure of Greenhouse Gas Emissions and Firm Value

<p><em>This study aims to determine the effect of executive compensation on firm value through greenhouse gas emissions disclosure as a mediation variable. Population in this research are firms listed in the Indonesia Stock Exchange (IDX) and published sustainability reports for the period 2015 to 2019. The sample determination in this study used a purposive sampling method and obtained 150 companies. The data analysis technique in this research is using Partial Least Square (PLS) test. </em><em>This study shows that executive compensation has a significant positive effect on firm value but does not affect greenhouse gas emissions disclosure. Greenhouse gas emissions disclosure has no significant effect on firm value. </em><em>This research contributes to the relationship of literature about the greenhouse gas emissions being able to mediate partially the effect of executive compensation on firm value. Furthermore, it also addresses greenhouse gas emission and executive compensation using company samples and periods that have not been explored previously.</em></p>

EXECUTIVE COMPENSATION AND FINANCIAL REPORTING QUALITY OF NIGERIAN FINANCIAL SERVICE INDUSTRY

The study evaluated the effect of executive compensation on financial reporting quality in Nigerian financial service industry for the period covered. These were with a view to providing information on the effect of executive compensation and financial reporting quality in Nigeria. The study employed a secondary source of data collection. The population for the study consisted of 22 quoted deposit money banks listed and whose stocks are actively traded on the Nigerian Stock Exchange (NSE) market for the period 2006-2017.The sample size of 14 was determined using purposive sampling method. Secondary data were collected on variables executive compensation, non-performing loan, loan loss provision, total loan, residual term all obtained from the audited Annual reports of the selected deposit money banks, fact book published by Nigerian Stock Exchange, and the Central Bank of Nigeria. Data collected were analyzed using Robust Regression. The results showed executive compensation (coef. =-0.139, p˂0.004) has a negative significant relationship with financial reporting quality. This study concluded that executive compensation has a negative significant effect on financial reporting quality.

Remuneração dos Executivos e Desempenho em Empresas Brasileiras Familiares e Não Familiares

RESUMO Objetivo: com o intuito de produzir novos insights acerca dos efeitos da remuneração dos executivos nas empresas, investiga-se a relação da remuneração dos executivos com o desempenho (curto prazo) e a política de investimentos (longo prazo) em empresas brasileiras familiares e não familiares listadas na Brasil, Bolsa, Balcão (B3). Métodos: pesquisa de procedimento documental foi realizada com dados da Economática® e de relatórios das empresas (Relatório da Administração, Formulário de Referência e Notas Explicativas). A amostra de 87 empresas compõe-se de 48 familiares e 39 não familiares. Resultados: indicam que a remuneração variável de curto prazo apresenta relação com desempenho e política de investimentos das empresas, enquanto a remuneração variável de longo prazo não apresentou significância. A remuneração variável de curto prazo revela potencial para maximizar o desempenho das empresas, com impacto mais forte nas não familiares. Em face à política de investimentos, a remuneração variável de curto prazo apresenta relação negativa, mas este efeito é revertido para as empresas não familiares. Conclusão: a remuneração dos executivos pode ser um mecanismo de governança para alinhar os interesses das partes, tanto em empresas familiares como em não familiares. Todavia, seu dimensionamento preciso deve considerar o tipo de propriedade e gestão corporativa.

The effect of executive compensation on earnings quality of conglomerates listed in Nigeria

This paper is an empirical analysis of the impact of Executive compensation on earnings quality of listed firms in Nigeria for the period of 2015-2019. The study adopts the multiple regression technique. Data were collected from the annual reports and accounts of sampled firms. The findings reveal that Executive compensation positively and significantly affect the earnings quality of listed Conglomerates in Nigeria, the result implies that firms that pay higher emoluments to its executive are likely to improve the quality of earnings. It is recommended that the listed Conglomerates firms should increase the amount paid as emoluments to their executives as the higher emolument paid and received by executives improve the level of earnings quality and reduces earnings management which may be detrimental to the goal and objectives of the firm. Key words: Compensation, Conglomerates, Executive, Incentives, Performance, Shareholders

ESG METRICS IN FIRM RISK ASSESSMENT: EVIDENCE FROM SHORT SELLING

ABSTRACT This study investigates the value-relevance of environmental, social and governance (ESG) metrics in the formulation of investment decisions. Specifically, the extent to which investors utilize ESG metrics in executive compensation contracts to formulate risk assessment in investing decisions. Prior research regards short sellers as particularly sophisticated investors with a desire to understand a company’s value creation plan by analyzing credible, standardized information to support risk assessment. However, a serious gap exists between corporates and investors over the standardization and consistency of ESG information and reporting. Prior research about the effect of executive compensation on ESG has been limited in scope and produced mixed results. These studies primarily focus on the use of ESG targets in executive compensation contracts as opposed to the effects of said targets on investment decisions. Using a hand-collected data set, the relationships between short interest, financial and ESG measures in executive compensation contracts are examined. The results show a correlation between short positions and the effectiveness of ESG target measures in executive compensation contracts indicating short sellers do incorporate the measures when assessing risk. Keywords ESG, Executive Compensation, Short sellers, Risk Assessment, Reporting targets

The Effect of Executive Compensation on Report Lags: An Empirical Evidence

The timeliness of financial reporting has been considered as an important factor that contributes to the well-functioning of an economy. This study extends the contemporary research stream by examining determinants of the timeliness of financial reporting process. Specifically, we investigate whether report lag is influenced by (1) the level of executive compensation; (2) the level of stock-based compensation compared to cash-based compensation, and (3) the level of executive compensation above the expected compensation level. We find that firms have shorter report lag when their level of executive compensation is higher. We also document that firms with more stock-based compensation have shorter financial reporting delays. Finally, firms with executive compensation level above the expected executive compensation are more likely to have shorter report lags. Our study underscores the importance of the type and the level of compensation as determinants of firms’ earnings reporting delays.

Pengaruh Kompensasi Eksekutif Dan Efisiensi Operasional Terhadap Kinerja Keuangan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Tahun 2016-2018

This study explain the effect of executive compensation and operational efficiency on the financial performance of banking company, which still unclear the effect of these variables. This study purposed to show and examine empirically the effect of executive compensation (X1), Non performing loan (X2), and Loan to deposit ration (X3) on financial performance banking company which measured by Return on asset (Y). the method that used in this study was causative comperative. The data which are used in this study were obtained from the banking company that listed in BEI in 2016-2018 and the sample were collected based on purposive sampling and resulted 117 companies. The result of this study showed that executive compensation has effect on ROA, while non performing loan has negative effect and significant on ROA, and Loan to deposit ratio has positive effect and significant on ROA. The next study expected to use another variables in order to get a better result and describe the variables which has effect on financial performance in company.

The Effect of Executive Compensation on Credit Default Swap Spread

Investors have been trying to formulate the optimum composition of executives’ compensation which will incentivize the executives to perform better and act in the shareholders’ best interests. This study aims to find empirical evidence about the impact of executive compensation on the default risk with the Credit Default Swap (CDS) spread as the proxy, using panel data to test the research model, which combines the analysis of cross-section and time series data. The study is conducted based on 1,416 observations of 177 U.S. companies from 2008-2015. The data are mainly collected from Datastream, Compustat, CRSP, and the US SEC’s EDGAR database. The current study provides a contribution by suggesting that executives’ compensation will trigger risk-taking behavior. The results of this study reveal, firstly, both equity-based compensation and debt-like compensation induce risk-taking behavior by the executives. Secondly, the correlation between both the form of the compensation and the CDS spread is weakened in a high information asymmetry environment. Lastly, this study finds that a CFO’s compensation has more influence on the CDS spread, compared to the other board executives, but this condition only occurs when the compensation is awarded in the form of debt-like compensation. To improve the generalization of the results, a further study may consider expanding the sample into several countries.

The effects of executive compensation and outside monitoring on firms’ pre-repurchase disclosure behavior and post-repurchase performance

We show that corporate governance mechanisms play an important role in controlling managers’ opportunistic behavior. Low executive equity compensation and a high intensity of outside monitoring help to discourage undesirable self-interested disclosure decisions by management before share repurchases. Corporate governance mechanisms also have a significant impact on long-run abnormal stock prices and operating performance. Firms that manipulate pre-repurchase disclosures experience positive long-term abnormal stock returns. However, we do not find that these firms experience positive long-run operating performance. Corporate governance mechanisms significantly attenuate the tendency toward negative pre-repurchase disclosures and their effects on stock prices and operating performance.

Does Money Spoil Character? Exploring Managerial Antecedents of Organizational Virtue Orientation

The beneficial effects of organizational virtue orientation (OVO) on firm outcomes have been established across several fields within strategic management scholarship. However, the scholarly understanding of this strategic orientation’s managerial antecedents remains scarce. At the same time, the effects of executive compensation, confidence and ethics-focused functional roles on strategic orientations indicate a missing link within top management scholarship. The recently formulated behavioral agency theory presents a fertile basis to derive hypothesis regarding incentives, executive behavior, and functional roles and their respective effects on OVO. Applying longitudinal data based on a unique data set of letters-to-shareholders (LtS) and the recently established CATA methodology, we indicate the positive association of cash-incentives and option-based incentives with OVO. We can furthermore support a positive association of executive confidence with OVO, moderated by market turbulence. The nomination o...

The Effect of Executive Compensation on Future Performance of Chinese Firms

The Effect of Executive Compensation on Future Performance of Chinese Firms

Simultaneous relationship between performance and executive compensation of Thai non-financial firms

PurposeThe purpose of this paper is to determine the two-direction relationship between financial firm performance and executive compensation in Thai listed companies; that is, effect of firm performance on executive compensation and the effect of executive compensation on subsequent firm performance. In investigating the relationship, governance, firm-specific and human capital characteristics, which should influence on the pay-performance system, are also considered. This study helps to shape an understanding of the effectiveness of the incentive system in the Thai context.Design/methodology/approachThe System GMM, with concern about the endogeneity problem of the simultaneous relationship, is applied to examine the relationship between firm performance and executive compensation. The samples to investigate this relationship composed of 5,139 firm-years observations for 15 years from the years 2000 to 2014 of 432 non-financial firms in the Thai stock market.FindingsThe empirical evidence reveals simultaneous relationship between performance and executive compensation in Thai stock market. It shows that compensation of executives in Thai firms corresponds to firm performance, and compensation of executives leads to an improvement in subsequent performance of Thai listed firms. Moreover, some corporate governance mechanisms and human capital of executives also revealed their particular effects on setting of the pay for performance system in Thailand.Originality/valueThis study confirms that the pay for performance system is applicable in Thailand. Furthermore, the empirical results of this study highlight effects of some governance and human capital characteristics on setting of the pay-performance system. Thus, this study should be a part of the growing body of literature in this area.

The Effects of Executive Compensation and Outside Monitoring on Firmss Pre-Repurchase Disclosure Behavior and Post-Repurchase Performance

Using a sample of management forecasts, we find that higher CEO and CFO equity compensation and lower institutional ownership concentration, percentage of independent director, and number of analyst following induce managers to release significantly more bad news, downward biased management earnings forecasts, and withhold good news before share repurchases. These manipulating firms experience positive post-repurchase long-term abnormal stock returns, but have no operating performance improvement. In contrast, lower executive equity compensation and higher intensity of outside monitoring constrain the pre-repurchase management opportunism. These non-manipulating firms do not have post-repurchase long-run stock anomaly, but experience superior operating performances. Our findings show that the corporate governance mechanism has a significant impact of on pre-repurchase managers' opportunistic behavior and post-repurchase stock prices and operating performances.