Executive Tenure Research Articles

Executive team's digital background, financial flexibility and corporate innovation: Evidence from China

Taking China's Shenzhen and Shanghai A-share non-financial listed companies as a research sample from 2018 to 2022, this study explores the relationship between executive team's digital background and corporate innovation. The empirical study shows that executive team's digital background can significantly promote corporate innovation. Financial flexibility plays a mediating role in the relationship between executive team's digital background and corporate innovation. In non-state-owned firms with longer executive tenure, executive team's digital background has a more significant effect on corporate innovation. This study provides theoretical support and practical guidance for strengthening corporate innovation.

The impact of corporate social responsibility on green technology innovation: An empirical study of listed companies in China

Using A-share listed manufacturing companies from 2012 to 2021 as a research sample, this paper investigates the impact of CSR on green technology innovation and analyses the mediating role of financing constraints and the moderating effect of executive tenure. The study finds that CSR has a significant role in promoting green technological innovation. CSR can further promote green technological innovation by alleviating financing constraints. Executive tenure has a moderating effect in the process of CSR influencing green technological innovation. Heterogeneity analysis shows that the impact of CSR on green technological innovation is more significant in non-state-owned and large enterprises.

Executive Tenure and the use of Social Media

Executive Tenure and the use of Social Media

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.

External fairness of executive compensation, institutional investor and M&A premium

PurposeThis paper aims to study the impact of external fairness of executive compensation on M&A premium, and examine the moderate role of institutional investors. The high M&A premium is the main factors that induce the huge impairment of listed companies’ goodwill and the plummeting performance. Executives are the decision-makers of M&As, and their decision-making process is inevitably affected by the psychological factors. In recent years, institutional investors have become an important external force that can affect the governance of listed companies.Design/Methodology/ApproachThe authors use M&A data of listed companies from 2008 to 2018 and use OLS regression to test the relationship between executive compensation fairness and M&A premium.FindingsThe results show that the lower the external fairness of executive compensation, the greater the M&A premium. Institutional investors can effectively reduce the impact of external compensation unfairness on M&A premiums. The mechanism tests show that executives' psychological perception of fairness induced by external unfairness reduces their motivation to work and prompts them to use high premium to seek alternative compensation incentives. Further examinations of executive characteristics and corporate characteristics show that the role of external unfairness in executive compensation in driving M&A premiums is more pronounced in companies with longer executive tenure, weaker executive reputation incentives and private property.Originality/ValueThis paper enriches the research on the pre-factors of M&A premiums from the perspective of executives’ psychological perception of fairness, provides evidence that institutional investors play a positive governance role and provides decision-making references for companies to take corresponding measures to reduce M&A premium risks.

Different tenure phases of executives and audit fees

Purpose The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain the effect of executives’ tenure on audit pricing. This paper aims to determine, which viewpoint dominates in explaining the relationship between audit pricing and executive tenure phases. Design/methodology/approach Using a sample of 11,198 firm-year observations from 2007 to 2016, the authors adopt an ordinary least squares regression model to assess the impact of the middle and long phases of executives’ tenure on audit fees. Findings Audit fees are significantly lower when executives enter the middle and long phases of tenure. The reduction in audit fees is greatest as both chief executive officers and chief financial officers enter the long tenure phase. Although audit fees gradually decrease as executive tenure is extended, they start increasing two years before the end of executive tenure. Furthermore, the negative association between the executive tenure phase and audit fees is greater when the executive is appointed externally. Finally, the long phase of executive tenure also mitigates the positive relationship between audit fees and internal control weaknesses. Research limitations/implications This study is based on US data. Future research may extend this study to other countries. Practical implications The findings are important to firms, practitioners and academicians, particularly, as the length of tenure of top executives has increased in recent years. By documenting that executives’ middle and long tenure phases reduce audit fees, the findings highlight the importance of maintaining executives in the firm. Finally, the findings have implications for investors, policymakers and auditors to identify companies with high audit risk. Originality/value This study is the first to document the impact of executives’ middle and long tenure phases on audit fees.

The ascension of executives' tenure, corporate risk-taking and corporate performance: evidence from Malaysia

PurposeThis study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian corporations.Design/methodology/approachTo test the hypothesis efficiently, the authors have extracted the data from Bloomberg for 788 listed companies of the Malaysian Stock Exchange. The methodology entails ordinary least squares regressions, quantile regression and dynamic system generalized method of moments model.FindingsFirst, the authors show that executive management tenure has a significant negative relationship with corporate risk-taking. It means that the long-tenured executives tend to undertake less risky strategies and decisions. Second, this study reveals that the longer executive management tenure has a positive relationship with corporate performance. Third, the moderating effect of corporate risk-taking with executive tenure (Tenure dummy*Risk) has a negative relationship with the corporate performance by 1%.Practical implicationsIt implies that the appointment of experienced executive management contributes towards corporate performance directly. However, experienced management trends take less risk, which eventually results in mitigating the corporate performance. On that basis, the findings are significant in highlighting the usefulness of executive leadership term and offers insights to academics, practitioners and policymakers.Originality/valueThis paper is novel since it is unique in evaluating the executive tenure and the preferences to handle risk strategies and how that impact the firm performance.

Relations between CEO characteristics and mergers and acquisition decisions in Brazilian companies

This paper investigates the probability of companies to perform Mergers & Acquisitions (M&As) based on the characteristics of the CEO.. We use a sample of 794 CEOs of nonfinancial firms, which were listed on the B3 from 2000 to 2017. We adopt a descriptive approach and run logistic regressions to examine the probability of a company performing M&As, given the characteristics of its CEO. We show that CEOs with finance backgrounds are less likely to perform M&As. We find no statistically significant correlations for other CEO’s characteristics, such as executive tenure, age, education, participation as chair of the board, previous experience as an entrepreneur or being a shareholder of the acquiring company.

Direct and indirect influences of political regimes on corruption

AbstractObjectiveThis paper studies the direct and indirect impacts of political regimes on corruption. Whereas the interplay of government is fundamental to corrupt acts, the present research sheds new light by showing the direct and indirect influences of dimensions of government structure on corruption.MethodsWe employ two different estimation techniques. First, we use OLS regressions, with year and regional dummies. Second, we employ mediation analysis to account for the intermediate role of government size in the relation between government structure and corruption in order to gauge the direct and indirect influences on corruptionResultsResults show that government structure, across various dimensions of authoritarian and nonauthoritarian regimes, significantly impacted cross‐national corruption. In particular, a nation's stock of democracy and parliamentary systems lowered corruption, while executive tenure and dimensions of authoritarianism added to corruption. On the other hand, the size of the legislature did not matter when it came to corruption. However, the direct influences of these government structure variables are mitigated or reinforced when the intermediate role of government size is considered in a mediation analysis.ConclusionsThe breakdown into the direct and indirect effects on corruption is a novel insight of this work, with useful policy implications.

Term-limit evasions and the non-compliance cycle

Executive term limits are evidently under stress in many jurisdictions. One mode in which they are evaded is through the formal revision or abrogation of a constitution. Such a process accelerates a pernicious cycle in which constitutional non-compliance begets constitutional instability, which in turn begets subsequent non-compliance. Such a non-compliance cycle is a core problem in law, and one that deserves more careful examination in various domains. This essay unearths original historical evidence of term-limit provisions and executive tenure in an effort to illuminate and evaluate the phenomenon. A background concern is that of international (and domestic) approaches to term-limit evasion. One intellectual response is that of militant democracy. The logic of that approach would imply the entrenchment and protection of term limits, which would presumably disrupt the cycle of non-compliance.

Management's Undue Influence over Audit Committee Members: Evidence from Auditor Reporting and Opinion Shopping

SUMMARY Audit committee members must be independent of management to protect shareholder interests. While current regulations restrict audit committee members from holding management positions (i.e., affiliations), studies find that management's preferences continue to impact audit committee decisions. This motivates analysis of independence threats beyond affiliations. We apply the American Institute of Certified Public Accountants' conceptual approach to independence and examine the threat of management's undue influence over audit committee members. Examining the relative tenure of executives and audit committee members, we find that greater management influence is associated with a lower propensity of the auditor to issue a modified going concern opinion to a distressed client. We also find that greater management influence is associated with increased opinion shopping behavior. These findings are consistent with an undue influence threat to audit committee independence. Our results extend the academic literature and inform regulatory concerns on audit committee independence. Data Availability: The data used in this paper are publicly available from the sources indicated in the text. JEL Classifications: M40; M42.

Experience, experience, experience: Too much of a good thing for executive performance

AbstractCumulative work experience is considered as a critical contributor to one's performance. However, Human Capital Theory and The Experience Trap propose seemingly contradictory perspectives regarding the work experience–performance relationship, and thereby calls for a means for integration. In this study, we investigated the relationship between cumulative experience and work performance using data generated from a comprehensive questionnaire and executive performance appraisals of 376 executives from a large business group in South Korea. By measuring work experience using multiple proxies (organizational tenure, executive tenure, and self‐evaluated, cumulative work experience), we found that the association between experience and performance is not simply linear, but rather a curvilinear (inverted‐U shaped). The time‐lagged study design utilized across two time‐points ensured the robustness of this finding. Interestingly, a closer look at the nature of the curvilinear relationship for organizational tenure and self‐evaluated experience uncovered opposite trends, providing a multi‐faceted understanding of the experience–performance relationship. Our findings challenge the conventional belief in the linear relationship between experience and performance, and call for a critical assessment of current human resources (HR) practices that heavily rely on work experience.

The Influence of Equity Incentive on Overinvestment in enterprises: The moderating effect based on the heterogeneity of executive team

This paper empirically examines the moderating effect of executive team heterogeneity on the influence of equity incentive on overinvestment behavior by using the data of Chinese A-share listed companies in Shanghai and Shenzhen from 2014 to 2018. The results show that equity incentive can restrain the overinvestment behavior of enterprises; The greater the age heterogeneity of the senior management team, the weaker the influence of equity incentive on overinvestment will be; The greater the gender heterogeneity of the senior management team, the greater the influence of equity incentive on the overinvestment of enterprises will be. The heterogeneity of executive team education and tenure has no effect on the relationship between equity incentive and overinvestment. The conclusion of this study has some enlightenment on how to construct and optimize the senior management team of listed companies, so that the senior management team can play its role fully and make reasonable and effective investment decisions.

Equilibrium Executive Compensation

We examine a general equilibrium dynamic economy in which each firm hires a manager who privately observes cash flows and can fire him after poor performance, generating costs to both parties. The contract is terminated when the manager's continuation value reaches his compensation at another firm net of his search cost. The unique competitive equilibrium features overcompensation, short-termism, and excessive executive tenure. When a firm increases executive pay, it increases the cost to other firms to retain their managers, in turn forcing them to raise and front-load their compensation packages. Inefficiencies decrease with the firm's discount rate and increase with the manager's discount rate, the termination cost to the firm, and the proxy for moral hazard. An increase in the search cost to the manager increases social welfare. In the competitive equilibrium, the private optimal contract can be implemented via inside equity relinquished by the manager upon moving to a new firm. Optimal corporate and income tax schedules can generate the social planner's allocation.

Influence of Corporate Governance on Financial Performance among Alcohol Beverage Firms

ABSTRACT The purpose of this study empirically investigates the influence of corporate governance structure on the firm’s financial performance of the alcohol beverage industry in the United States. Secondary financial data were collected for the U.S.-based alcohol beverage firms. Bivariate correlation and fixed-effects model analyses were performed to examine the proposed impacts. A two-stage least-squares (2SLS) regression analysis was subsequently performed to examine the endogeneity. The analysis outcomes support the finding that certain corporate governance attributes significantly affect the financial performance of alcohol beverage firms. Theoretically, the findings reaffirmed the financial impact of industry-specific corporate governance structures (i.e., stewardship versus agency theory, and integrated traits of hospitality, retail, and distribution of the alcohol industry). Managerial implications are suggested in terms of the alcohol industry’s specific corporate governance models, such as the balance among common stock ownership, executive tenure, board-size increase, and levels of control by outside board members. As a relevant sector (e.g., festival) of the hospitality and tourism industry, corporate governance of the alcohol beverage industry has never been empirically nor theoretically studied. The governance attributes in this study are compared between stewardship and agency theory and provide a better understanding of alcohol beverage industry firms’ corporate governance structure.

User Perspective Towards M-banking in Bangladesh: A Case Study Based on University Students

In recent years, as the largest emerging market, China's economic development has gradually shifted from the high growth stage to the high-quality development stage. The company is an essential micro-subject of macroeconomic activities, and an entrepreneur's academic background is a critical factor in achieving high-quality corporate development. This study takes the data of IT listed companies in China from 2012 to 2017 as the sample, Screening research samples based on academic experience requirements based on requirements for current or former teaching and research positions in universities, then makes an empirical analysis on the connection between academic executives and companies innovation ability. The results indicate that there is a significant positive correlation between executive academic experience and the company's innovation ability, i.e., academics-type. There is also a significant positive correlation between the average tenure of executives and innovation ability, which still holds after the robustness test. Researching the relationship between the academic experience of the executives of listed companies and their innovation ability can not only enrich the research on the characteristics of the senior management team, but also provide theoretical guidance for the construction of senior management team, and provide a few suggestions for the improvement of innovation ability and the formulation of government-related policies.

Factors that Influence the Internal Audit Function's Maturity

SYNOPSIS We identify several dimensions of the internal audit function (IAF) as a composite measure of IAF maturity by using a Principal Components Analysis (PCA). Our data are from the Common Body of Knowledge in Internal Auditing (CBOK) 2015 dataset. We find confirmation for our four hypotheses, where the support the IAF receives from the board, diversified training programs, the use of the IAF as a management training ground (MTG), and the maturity of the risk management (RM) system are significantly related to IAF maturity. Our hypotheses are verified both at a global and a regional level. Regarding control variables, IAF age, chief audit executive (CAE) tenure, CAE certifications, and unlisted companies are also significant at a global level. We discuss implications of these findings for future practice and research. Data Availability: Please contact the Institute of Internal Auditors Research Foundation.

Does regional air quality affect executive turnover at listed companies in China?

This paper studies whether regional air quality affects executive turnover in China. Executives can change locations when they are concerned about the health risks from prolonged exposure to poor air quality as tenure extends. Poor air quality can lead to poor company performance, which can also lead to forced executive turnover. Using air quality data of prefecture-level cities and executive data of listed companies from 2004 to 2014, we find that poor regional air quality significantly increases executive turnover. The impact is more pronounced when executive tenure is longer but not when company performance is poorer, suggesting that executives’ concern about air quality is the channel of the impact. High executive compensation does not mitigate the impact, whereas political incentives at state-owned listed companies do. Our results indicate the role of regional air quality in ensuring the stability of company executives and improving the regional competitiveness for the labor force in China.

Can Executive Academic Experience Help Companies Improve Their Innovation? Empirical Study of Chinese Listed It Companies

In recent years, as the largest emerging market, China's economic development has gradually shifted from the high growth stage to the high-quality development stage. Company is an essential micro-subject of macroeconomic activities, and an entrepreneur's academic background is a critical factor in achieving high-quality corporate development. This study takes the data of IT listed companies in China from 2012 to 2017 as the sample, Screening research samples based on academic experience requirements based on requirements for current or former teaching and research positions in universities, then makes an empirical analysis on the connection between academic executives and companies innovation ability. The results indicate that there is a significant positive correlation between executive academic experience and company’s innovation ability, i.e., academics-type. There is also a significant positive correlation between the average tenure of executives and innovation ability, which still holds after robustness test. Researching the relationship between the academic experience of the executives of listed companies and their innovation ability can not only enrich the research on the characteristics of senior management team, but also provide theoretical guidance for the construction of senior management team, and provide a few suggestions for the improvement of innovation ability and the formulation of government-related policies.

Top Executive Tenure and Management Forecast Accuracy

Top Executive Tenure and Management Forecast Accuracy