In the German two-tier system, the board of executives and board of (independent) directors are two distinct bodies; directors may not simultaneously be executives. German regulatory provisions on codetermination require employee representatives to hold at least one-third, and sometimes even half, of the board seats in companies with more than 500 employees. This gives employees some power to influence executive compensation. Given that employees invest specifically in a firm and suffer psychological and financial costs in the event of financial distress, they may be interested in the firm’s long-term performance, low firm risk, and favourable working conditions. Analysing the CEO compensation characteristics of German publicly listed firms for 2015–2022, we find that higher levels of codetermination are associated with more variable CEO pay. Furthermore, under stronger codetermination, CEO compensation is more likely to use deferred bonus compensation. We also find weak evidence that stock option plans are less likely in this scenario. Finally, firms with higher levels of codetermination are more likely to use employee-related performance criteria for variable CEO pay. These results tend to be robust to alternative measures of codetermination and controlling for endogeneity. Overall, our results suggest that codetermination creates long-term incentives for CEO pay.

This study investigates how corporate governance (CG) mechanisms influence the quality of integrated reporting (IR) by conducting a systematic review of 23 empirical articles published between 2020 and 2025, sourced from Sinta 4-accredited or Scopus Q4-indexed journals. The articles were selected using predefined inclusion criteria and analyzed thematically. The findings show that governance factors such as board independence, audit committee activity, board size, gender diversity, audit quality, and executive compensation play a significant role in enhancing IR quality. In Indonesia and other regions such as Asia, Europe, and South Africa, the influence of CG on IR is evident, although variations exist due to sectoral and methodological differences. Most studies are grounded in agency theory, with support from stakeholder and legitimacy theories. The review highlights that robust governance practices are consistently associated with high-quality integrated reporting, offering actionable insights for regulators, policymakers, and organizations aiming to strengthen CG frameworks and reporting practices.

Abstract Agency theory suggests that monetary incentives are effective mechanisms to align managers’ and shareholders’ interests. Hence, value-maximising managerial decisions are positively related to their compensation levels, and vice versa. Several studies confirm that the practice of earnings management could be detrimental to a firm’s value; however, the literature examining the relation between CEOs’ total compensation and earnings management remains inconclusive. This may be due to the unobserved determinants of executive compensation. In line with the predictions of agency theory, this study provides conclusive evidence of this relation by documenting a negative relation between abnormal compensation (the proportion of pay that known factors cannot accurately determine) and earnings management. Thus, suggesting that CEOs involved in earnings management are penalised in the form of reduced excess compensation. Additionally, we find that the negative association between earnings management and abnormal compensation persists in both high and low-governance firms, and is robust to the presence of both internal and external corporate governance mechanisms as additional control variables. Since real earnings management is arguably more value-destructive in the long run, our results also confirm that CEOs involved in higher levels of real earnings management are penalised more severely than CEOs involved in higher levels of accrual earnings management.

ABSTRACT Accurate and standardized disclosure of corporate information is fundamental to maintaining orderly capital markets by mitigating information asymmetry and promoting efficient resource allocation. Directors’ and Officers’ (D&O) Liability Insurance serves as both a motivation-enhancing mechanism and an instrument of oversight, positively influencing the firm’s governance structure and enhancing information quality. Using data from A-share listed companies in China over the period 2009–2021, this paper investigates how D&O Insurance influences corporate information transparency. Empirical evidence indicates that D&O Insurance significantly enhances transparency through strengthening internal control quality, reducing agency costs, as well as improving audit quality. Further analysis reveals that the greater the performance pressure on executives, the weaker this effect; while the higher the executive compensation, the stronger the effect. Heterogeneity analysis suggests that companies with higher institutional ownership and weaker corporate governance exhibit more significant improvements in transparency. Additionally, improved transparency resulting from D&O Insurance significantly alleviates firms’ financing constraints. This paper provides new insights into the role of D&O Insurance in improving information quality, shedding light on its broader role in shaping corporate governance systems.

ABSTRACT We examine the impact of environmental rating feedback on carbon emissions in energy-consuming firms. Empirical evidence from China demonstrates that environmental ratings below the peer level undermine corporate legitimacy, prompting firms to significantly reduce carbon emission intensity to restore legitimacy. However, firms with environmental ratings above the peer level show no statistically significant reduction in carbon emission intensity. This carbon reduction effect is more significant in firms without shares held by ESG funds or facing lower public environmental concerns. Furthermore, we find that executive compensation above the peer level can enhance this carbon reduction effect.

[Purpose] This study aims to analyze the impact of ESG performance on executive compensation of domestic small and medium－sized enterprises and to determine how this relationship varies depending on corporate characteristics such as company size and governance quality. [Methodology] A survey was conducted targeting small and medium－sized enterprises located in Busan, Ulsan, and Gyeongnam. Based on the survey data from 130 companies, multiple regression analysis and moderated regression analysis were conducted to verify the impact of ESG performance on executive compensation and the moderating effects of corporate size and governance quality. [Findings] ESG performance was found to have a positive impact on executive compensation. Next, we analyzed whether company size and governance quality moderated the impact of ESG performance on executive compensation. Results showed that ESG performance had a stronger positive impact on executive compensation in larger companies and with better governance quality. [Implications] This study is significant in that it expands the existing research on executive compensation and ESG performance, which was focused on large corporations, to the small and medium－sized enterprise sector.

This study investigates the implementation of best practices in executive compensation among Malaysian publicly listed companies, focusing on their compliance with the Malaysian Code on Corporate Governance 2021. Utilizing a sample of 26 firms and 222 directorship profiles, the research evaluates the extent to which remuneration policies align with performance metrics, transparency standards and ethical governance practices in financial year ended 2024. The findings reveal full compliance with MCCG Practice 8.1, indicating a widespread commitment to baseline transparency. However, adoption rates for Practices 8.2 and 8.3 are critically low, suggesting a lack of depth in governance maturity. A significant correlation was found between firms that adopt gender diversity and professional development for directors and improved adherence to remuneration related governance practices. Therefore, the study contributes to the discourse on ethical leadership in emerging markets, offering practical insights for policymakers, regulators and boards aiming to promote equitable, performance-aligned executive compensation. A key limitation is the small sample size, which may limit the generalizability of the findings. Future research should expand the dataset and include qualitative insights.

Purpose This study investigates whether CEO characteristics improve the prediction of firm-level maturity mismatches between investment and financing and develops an improved framework to evaluate their contribution. Design/methodology/approach We compare the out-of-sample performance of a CEO-augmented model (which includes CEO characteristics) with a baseline model that contains only firm fundamentals in predicting firm-level maturity mismatches. The comparison spans machine learning algorithms (Lasso, Elastic Net, Decision Tree and XGBoost) and traditional linear approaches (standard OLS and OLS with random effects). After identifying XGBoost as the most effective algorithm in capturing the predictive value of CEO characteristics, we use it to explore the economic implications of enhanced prediction. Findings We construct an XGBoost-based predictive framework and demonstrate that incorporating CEO characteristics enhances the prediction of firm-level maturity mismatches. This indicates that CEO characteristics can also function as predictors with incremental value beyond firm fundamentals and that XGBoost effectively captures their complex and nonlinear associations. These findings are robust across validation checks. Variable importance analysis identifies CEO tenure, annual cash compensation and shareholding as key predictors exerting intricate effects on maturity mismatch patterns. Research limitations/implications While this study generates several valuable findings, some limitations remain. First, although incorporating CEO characteristics improves predictive performance, the gain is relatively modest. This likely reflects both the inherent complexity of maturity mismatch and the limited informational contribution of CEO features relative to firm fundamentals in this setting. Second, as a predictive approach, machine learning restricts causal interpretation. Although our feature importance and pattern analyses offer some insights, they cannot fully uncover the underlying mechanisms. Future research could explore double machine learning or hybrid methods to better integrate causal inference with prediction. Practical implications The proposed framework yields practical implications. To our knowledge, this is among the first studies to develop a predictive system for firm-level maturity mismatch. By integrating CEO characteristics, our framework enables regulators and investors to flag potential mismatch risks ex ante. Moreover, the use of machine learning allows for adaptation to region-specific variables, enhancing contextual relevance and predictive accuracy, especially in diverse emerging market settings. Our analysis also uncovers economically meaningful patterns. In particular, the observed trade-off between equity- and cash-based compensation may reflect their differing effects on agency costs and maturity decisions. These insights offer firms a new perspective for incorporating financing risk considerations into executive compensation design. Originality/value This study uncovers a nonlinear predictive relationship between CEO characteristics and firm-level maturity mismatches and proposes a CEO-augmented predictive framework to improve prediction performance. The framework helps regulators and investors identify hidden risks and encourages firms to consider CEO characteristics in executive selection and incentive design to mitigate financial fragility.

ABSTRACT This study examines how linking executive compensation to corporate social responsibility (CSR) metrics affects audit fees. The findings reveal that CSR‐linked compensation increases audit fees, a result consistent with agency theory which suggests that such contracts can exacerbate managerial opportunism. This research identifies potential underlying channels through which CSR‐linked compensation affects audit pricing. Furthermore, the positive relationship is strengthened for auditors with longer tenure or industry expertise but weakened for firms with higher institutional ownership. Overall, this work highlights increased audit fees as a significant cost of CSR‐linked compensation, revealing its dark side from a risk assessment perspective.

With the rise of the digital economy and digital-intelligent transformation, companies face the challenges of growing competition for high-end talent and the limited effectiveness of long-term incentives. Meanwhile, since human capital is difficult to collateralize, traditional executive compensation contracts fail to alleviate the agency conflict. Managers tend to perform short-term behaviors, while shareholders emphasize long-term value. Therefore, from the perspective of the collateralizability of human capital and using Yili Group as a case study, this article examined the impact of AI talent evaluation on compensation contracts and innovation risk sharing. The article finds that AI technology significantly improves the accuracy and predictability of talent evaluations, enhancing the collateralizability of human capital, which encourages firms to be more willing to advance long-term equity incentives and to proactively bear the risk associated with expensing R&D costs, and fostering an innovation risksharing mechanism centered on the firms and coordinated with government subsidies. In conclusion, this article not only expands the theoretical framework of human capital theory in the digital intelligence era, but also provides a practical approach for enterprises to optimize long-term incentives and enhance their ability to undertake innovation risk.

ABSTRACT Among the various literature streams, the impact of Environmental, Social and Governance (ESG) on company's value drivers has raised importance from both stakeholders' and shareholders' perspectives. In this context, the systematic risk component (CAPM's beta) emerges as a critical factor that needs to be deeply analyzed, taking into account ESG. Since the relationship between ESG and the systematic risk is largely controversial, this study aims to explore this latter by also considering the moderating role played by two types of internal controls: the audit committee independence and the ESG‐related executive compensation. To reach the target, an analysis on a sample of 200 non‐financial European listed companies observed from 2015 to 2023 has been performed with a fixed effects estimator and random forest. Findings reveal an inverted U‐shaped relationship between ESG score and beta as well as a moderating role played by the internal controls, providing several theoretical and practical contributions.

<p>The Business Process Outsourcing (BPO) industry has consistently witnessed tremendous growth, but it has a chronic problem of high employee turnover, which is both expensive and recurring. This quantitative research investigates the relationship of leadership styles, such as transformational, transactional, autocratic, and laissez-faire leadership, on turnover intention of one hundred seventy-nine (179) rank-and-file employees from BPO sectors in Digos City, Philippines. The researchers used the 5-point Likert scale to measure the respondents' rate of agreement or disagreement with each statement of the two variables. Statistical techniques such as mean and Pearson's r were also used to measure the correlation between the variables. The examined data revealed a high descriptive level of overall leadership styles and a very low descriptive level of turnover intention among the participants. It also revealed a weak and statistically non-significant correlation between the two variables (r = 0.061, p = 0.415). The results suggested that while leadership styles are visibly practiced within these organizations, they do not appear to be the primary determinant of employees' decisions to stay or leave in the BPO sectors in Digos City.</p><p><strong>JEL: </strong>M12 – Personnel Management; Executive Compensation; Executive Pay; J63 – Turnover; Vacancies; Layoffs; J24 – Human Capital; Skills; Occupational Choice; Labor Productivity; M54 – Labor Management; C12 – Hypothesis Testing</p>

In typical executive compensation structures, higher corporate ranks are associated with greater pay. However, the reform of state-owned enterprises (SOEs) in China introduced strict salary caps for top executives, while lower-tier managers continued to receive market-based compensation, resulting in a phenomenon of pay-rank inversion—where subordinates earn more than their superiors. Leveraging this anomaly as a quasi-natural experiment, this study investigates the specific impact and underlying mechanism of pay-rank inversion on mergers and acquisitions (M&A) decisions and subsequent value realization within Chinese SOEs, thereby addressing the broad academic discourse on optimal executive compensation design. Employing a difference-in-differences (DID) approach with panel data spanning from 2007 to 2022, our analysis reveals that pay-rank inversion significantly reduces firms’ M&A intentions. Mechanistic analysis suggests that this negative effect arises primarily from diminished executive risk-taking. Furthermore, we find that the adverse impact is attenuated when CEOs possess longer tenures or receive equity-based incentives, but it ultimately undermines the realization of value post-M&A. These findings highlight the unintended consequences of high-level compensation reforms and emphasize the critical role of a well-structured pay hierarchy in sustaining executive incentives for strategic decision-making. Despite providing robust evidence, this study is subject to limitations, including its focus on measuring inversion only between the first and second management tiers. Future research should extend the analysis to the pay inversion between the listed firm and its controlling SOE group and explore alternative causal pathways beyond risk-taking, such as CEO work motivation, to deepen the understanding of high-level executive behavior.

In recent years, Environmental, Social, and Governance (ESG) considerations have become central to corporate governance, moving beyond symbolic gestures to strategic imperatives. Among the most significant developments in this domain is the integration of ESG metrics into executive remuneration frameworks. Linking executive pay to ESG performance is increasingly seen as a lever to align managerial incentives with long-term sustainability goals and stakeholder expectations. Despite growing institutional interest and regulatory mandates, academic research on ESG-linked executive remuneration remains fragmented and underexplored. This study applies a bibliometric and conceptual analysis to examine the global scholarly landscape on ESG-linked executive compensation from 2017 to 2025, drawing on data from the Scopus database. A final dataset of 115 English-language documents was analyzed using bibliometric tools to assess publication trends, source types, disciplinary scope, citation patterns, and thematic evolution. The results reveal a sharp increase in scholarly output post-2022, with journal articles overwhelmingly dominating the literature (95.65%). Business, Economics, and Accounting remain the core disciplines, although Environmental Science and Social Sciences are gaining presence. Citation analysis shows that early foundational works remain the most influential, while more recent studies face citation lag. Key bibliometric insights reveal a research landscape driven largely by academic inquiry, with limited industry or practitioner engagement. Interdisciplinary breadth is emerging but remains uneven across regions and fields. Thematic clusters highlight ESG as a long-term incentive tool, yet studies evaluating behavioral or performance outcomes are scarce. This study fills a critical gap by offering a structured, evidence-based map of the field, identifying underexplored intersections between ESG and executive pay. It provides actionable insights for policymakers, boards, and investors seeking to design performance-based pay systems that are both ethically aligned and strategically resilient.

Female CEOs in turbulent times: The effect of terrorist attacks on executive compensation

Do shareholders vote against executive compensation when pay is misaligned with performance?

Executive compensation incentives, consumer green preferences, and corporate risk

The impact of executive compensation stickiness on enterprises’ green innovation efficiency—— A threshold effect based on audit quality

ESG performance and executive compensation levels: an empirical study

Drawing on an annual dataset of Chinese Shanghai and Shenzhen A-share listed companies covering the years 2011 to 2023, this study employs multiple regression analysis to investigate the impact of ESG information disclosure on corporate environmental performance and its underlying mechanisms. The results indicate that ESG disclosure significantly enhances environmental performance, a relationship mediated by green innovation, media attention, and executive compensation. Furthermore, heterogeneity analysis reveals that this positive effect is more pronounced in state-owned enterprises, firms with high-quality internal controls, and environmentally sensitive industries. This large-sample study provides a new perspective on how ESG disclosure bolsters corporate green competitiveness and long-term value, offering theoretical support for improving environmental governance and informing policy to promote sustainable economic development in China.