Compensation Governance Research Articles

The determinants of corporate social responsibility (CSR) committee: executive compensation, CSR-based incentives and ESG performance

PurposeThis paper aims to investigate whether executive compensation, corporate social responsibility (CSR)-based incentives, environmental social and governance (ESG) performance and firm performance are the significant predictors of CSR committees, in addition to CEO, firm and corporate governance characteristics, from the tenet of stakeholder and managerial power theories.Design/methodology/approachSwitzerland is an exemplary country from the perspective of corporate governance and executive compensation. This empirical study includes a panel data set of listed Swiss companies, so fixed-effect logistic regression has been used.FindingsIt has been found that the companies that offer CSR-based incentives and higher compensation to their CEOs and have better ESG performance are more likely to have CSR committees.Practical implicationsThis empirical paper fills the gap in the literature, guides practitioners about the factors that influence the creation and efficiency of CSR committees, and inspires regulatory bodies to ponder on a mandatory CSR committee to form resilient and sustainable organizations worldwide.Social implicationsCOVID-19 has re-emphasized the prominence of sustainability and the stakeholder approach. Thus, this paper indicates that CSR committees require the adaption and implementation of a holistic sustainability policy that integrates both external and internal factors and thereby provides a whole process for sustainability issues.Originality/valueThe impact of CSR committees on corporate social performance (CSP) has already been investigated. However, the predictors of CSR committees have been less scrutinized in the literature.

Systematic review in financialization politics: the role of corporate governance and managerial compensation

Systematic review in financialization politics: the role of corporate governance and managerial compensation

The Impact of Corporate Governance and Fiscal Loss Compensation on Tax Avoidance Policies: Indonesian Banking Sector

The Impact of Corporate Governance and Fiscal Loss Compensation on Tax Avoidance Policies: Indonesian Banking Sector

Corporate governance and executive compensation: do they impact on operating performance and valuation of real estate firms?

PurposeCorporate governance principles are living a positive momentum in light of the megatrends reshaping the world. An effective company based on sound governance principles can prevent issues and corporate scandals as the company ensures greater transparency and accountability. Accordingly, this paper aims to investigate the relationship between shareholder-oriented corporate governance mechanisms, value and performances in the real estate sector.Design/methodology/approachThis paper investigates the relationship between corporate governance mechanisms, performance and value in a sample of 111 USA real estate firms. After collecting data from 2014 to 2018, this paper tests the research hypothesis using the linear fixed-effect model.FindingsThe results demonstrate a positive impact of shareholder-oriented corporate governance mechanisms on performance and value. In particular, firms with no chief executive officer (CEO) duality and staggered board mechanisms and recognizing excess variable compensation to the firms' executive have a significantly higher Tobin's Q, return on assets (ROA) and price-to-book performance.Practical implicationsThe implications are twofold: on the one hand, this motivates shareholders to establish new corporate control mechanisms to maximize value, attract more capital and improve operating performance. On the other hand, this allows investors to direct the investors' resources toward real estate firms with effective corporate governance mechanisms that may return higher performance and value.Originality/valueFocusing on the real estate industry, where governance is expected to have a lower impact due to solid regulation, especially in real estate investment trusts (REITs), the research allows the formulation of industry-specific inferences that may be generalized for the general market.

Sustainability performance and board compensation in Japan and ASEAN-5 countries

This study examines the association between sustainability performance in terms of the overall environmental, social, and governance (ESG) score and compensation for the board of directors at companies in Japan and five member countries of the Association for Southeast Asian Nations (ASEAN-5). Then, we examine each of the individual ESG pillar scores and their association with board compensation. Drawing on agency and stakeholder theories, and using a sample of sustainability-friendly companies for the period 2015 to 2019, we find, first, that in both Japan and the ASEAN-5, ESG scores are positively associated with board compensation, and, second, that in the ASEAN-5, the social pillar score is positively linked with board compensation. However, at Japanese companies, the governance pillar score is positively related to board compensation. Our study contributes to the academic literature on sustainability performance and board compensation by providing new empirical evidence on the relationship between overall and disaggregated ESG performance and board compensation.

A study of ecological compensation from the perspective of land use/cover change in the middle and lower Yellow River, China

• The equivalent coefficient is revised according to ability and willingness to pay. • The Best-worst method is used to determine the weight of the allocated indicators. • A 10 km buffer calculation strip is established in the compensated payment area. • The overflow of hydrological adjusting is greater than that of erosion prevention. • Ecological compensation in 2010–2020 is higher than that in 2000–2010. Coordinated governance and horizontal ecological compensation are important ways to realize ecological protection and high-quality development in the Yellow River basin. Taking the middle and lower reaches of the Yellow River as the research object, this paper analyses the compensation relationship and amount of cities along the line in Shaanxi, Shanxi, Henan and Shandong provinces. Firstly, the spillover value of regulation of water flows and erosion prevention of 32 counties along the Yellow River in Shaanxi and Shanxi provinces were calculated during 2000–2010 and 2010–2020 from the perspective of land use/cover change (LUCC). Secondly, the compensation accounting index system was established based on the classification of ecological services given the beneficiaries' individual preferences, and each indicator's weights were determined based on the Best-worst method. Finally, setting the water ecological service value of the 10 km buffer zone on both sides of the Yellow River as the accounting scope, this paper calculated the amount of ecological compensation paid by 16 cities in Shandong and Henan provinces. The results show that: (1) The spillover value of Shaanxi and Shanxi provinces in 2010–2020 is greater than that in 2000–2010, and the values of erosion prevention in both stages are lower than that of regulation of water flows; (2) From the perspective of providers, the highest is 3.68e + 08 yuan in Lvliang from 2000 to 2010, while the highest is 3.60e + 09 yuan in Yulin from 2010 to 2020; (3) From the perspective of beneficiaries, Zhengzhou has the highest amount of compensation in Henan province, which is 2.28e + 08 yuan in 2000–2010 and 9.41e + 08 yuan in 2010–2020 respectively. In Shandong province, Heze pays the highest value of 1.27e + 08 yuan from 2000 to 2010, and Jinan pays the highest value of 9.56e + 08 yuan from 2010 to 2020. The ecological compensation scheme obtained in this paper is more sustainable than the vertical compensation and expands the scope of the existing ecological compensation standards, which can effectively stimulate the enthusiasm for ecological protection, and reduce the financial pressure on the central government.

PENGARUH CORPORATE GOVERNANCE DAN KOMPENSASI MANAJEMEN TERHADAP MANAJEMEN PAJAK

This study aims to determine the influence of corporate governance and management compensation on tax management. Tax management is a dependent variable and corporate governance and management compensation is an independent variable. This type of research is quantitative, with a population of 77 companies this research was conducted on property and real estate sector manufacturing companies listed on the IDX in 2016-2020, a research sample of 8 companies with 5 years of observation, the sample determination method used was purposive sampling. The analysis method uses multiple regression analysis, T test and F test using Eviews 9. The results showed that corporate governance affects tax management and management compensation affects tax management. Meanwhile, corporate governance and compensation management have a simultaneous effect on tax management

Corporate Governance, Board/CEO Ties and New Outsider CEO Compensation

The role of company directors in setting new CEO compensation has become more complex in recent times with the creation of a new CEO labor market. Directors can potentially utilize their relationships with prospective CEOs to determine new CEO compensation in the interests of investors. Conversely, new outsider CEOs can potentially be empowered by their relationships with directors to negotiate compensation in their own interests and against that of investors. This study explores this issue through examining the impact of board/CEO ties in 1,173 outsider CEO successions on a range of fixed and short- and long-term, performance-related CEO compensation ratios across a range of developed and developing markets where there are varying approaches to corporate governance. Results show that new outsider CEOs in the United States and other Anglo-American institutional environments are able to leverage their relationships with directors to restructure compensation in their own interests and against those of investors.

Executive compensation and the financial performance of Polish listed companies from the corporate governance perspective

Research background: The level of compensation earned by CEOs and the relationship between executive pay and companies? performance is one of the most widely studied issues in the corporate governance literature. Studies conducted in the last several decades have provided evidence that CEO pay should be aligned with accounting financial measures. Purpose of the article: The main purpose of this paper is to determine the relationship between executive compensation and organizational financial performance. In particular, the effect of net income and comprehensive income as the accounting measures of financial performance on executive compensation is compared. Methods: The research comprised listed companies on the Warsaw Stock Exchange (WSE). The role and effect of accounting financial measures on executive compensation are analyzed based on three regression models. The period of analysis spanned ten years, from 2009 to 2018. Findings & value added: There are three conclusions that can be drawn from the study. Firstly, executive compensation in the analyzed companies largely depends on the accounting measures of financial performance, based on net income and comprehensive income (excluding ROE). Secondly, its level is significantly and positively influenced by the company?s size, Tobin?s Q ratio, debt ratio, and dividend rate. Thirdly, comprehensive income has a stronger effect on executive compensation than net income. Our findings add some potentially noteworthy dimensions to the economic literature on corporate governance, which is especially important to apply in the CEE region and other emerging economies. The Anglo-American assumption of corporate governance and executive compensation policy might not be suitable for the realities in much of the world.

Research on the Paths and Effectiveness of Governance Tools Based on the Evolution of Environmental NIMBY Event.

Identifying the path and effectiveness of governance tools is the key to environmental NIMBY (not in my back yard) event governance. However, there are limited studies on the path between effective governance tools and environmental NIMBY events. Based on the theory of emotional catharsis, we establish an analytical framework for the evolution of the environmental NIMBY event and analyze the effectiveness of the current main governance tools. The results show that government solicitation of opinions (GSOs) governance tools are insignificant in the governance of resistance behavior. The effects of public demand communication (PDC) governance tools and compensation negotiation (CN)governance tools on resistance behaviors all show a significant negative correlation; negative emotions play an intermediary role in their governance tools. The overall performance is that the greater the compensation, the lower the willingness to engage in resistance behavior. The establishment of a reasonable compensation system can effectively reduce the public’s willingness to engage in resistance behavior. Through the evaluation of the effectiveness of governance tools in environmental NIMBY events, this study helps to improve governance tools and has important practical significance for solving the environmental NIMBY dilemma.

A Two-Dimensional Assessment of China’s Approach Concerning the Compensation Fund for Ship-Induced Oil Pollution Damage: Pollution Governance and Victim Compensation

China has adopted a domestic approach to the compensation fund for ship-induced oil pollution damage by establishing the Chinese Ship-induced Oil Pollution Compensation (CSOPC) Fund. After almost 10 years of practice, there are still opinions and questions regarding the rationality of China’s domestic approach. This study reassesses China’s domestic approach by a two-dimensional analysis of the current position and potential developments of the CSOPC Fund’s functions in pollution governance and victim compensation. At the present stage, the goal of adequate compensation to victims is not well achieved by the CSOPC Fund when compared to its other goal of ensuring a better oil pollution emergency reaction. Given that the International Oil Pollution Compensation (IOPC) Fund is unlikely to contribute much to pollution governance, and the current inadequacy and defects of the CSOPC Fund can be improved gradually, it is suggested that China should continue its domestic approach with necessary improvements. Using the CSOPC Fund’s practice as a case study, this research intends to explore the pollution governance side of the compensation fund that has not yet been fully addressed, demonstrating the key value of the domestic fund compared to the IOPC Fund.

Quality of Governance, Opportunity Costs, and CEO Compensation Structure

Quality of Governance, Opportunity Costs, and CEO Compensation Structure

Thematic structure of accounting research by co-word analysis

This paper aims to discover the thematic structure of the accounting field and to highlight prominent, emerging, and fading themes across periods and regions. This study follows a systematic approach benefiting from co-word analysis through social network analysis and visualisation maps. This analysis considers the keywords presented within 7,250 articles published by 22 accounting journals over the period from 2000 to 2016. The results indicated that the themes of earnings management, corporate governance, disclosure, auditing, voluntary disclosure, conservatism, analyst forecasts, and executive compensation were the most prominent topics in accounting research. In addition, the regional co-word analysis found that while the regions of North America and Asia mostly focused on auditing- and earnings-related themes, Europe and Oceania focused on management accounting, corporate social responsibility, performance measurement, public sector, and accounting history. This is an initial attempt to examine the thematic structure of the accounting field using co-word analysis.

Institutions, Corporate Governance, Board/Ceo Ties and New Outsider CEO Compensation

Institutions, Corporate Governance, Board/Ceo Ties and New Outsider CEO Compensation

Corporate Governance and Managerial Compensation Horizon under Common Ownership

This paper studies the impact of corporate governance mechanisms on managerial compensation horizon under common ownership. We find that the predominant governance approach under common ownership is the threat of exit, which inadvertently exacerbates managerial myopia. Hence, common owners tend to grant long duration pay in managerial compensation contract to mitigate such an adverse consequence. Using financial mergers as exogenous shocks for the difference-in-differences analyses, we show that our results are robust to the endogeneity concerns. Further cross-sectional analyses provide strong evidence supporting this notion as we find that the positive relation between common ownership and CEO pay duration strengthens with higher liquidity, worse information asymmetry, weaker governance, and in states with non-compete agreement enforcement. Long-pay duration under common ownership is effective in mitigating managerial myopia as it improves firm long-term performance and reduces stock price crash risk. Additional tests show that active common owners tend to award long pay duration while passive common owners tend to use short pay duration, and our results are robust to other executives.

Board of Directors, Audit Committee, Executive Compensation and Tax Avoidance of Banking Companies in Indonesia

Tax avoidance is the hottest issue in the last five years. It is reinforced with the Tax Amnesty Program by the Directorate General of Taxation (DJP), which began in June 2016. Therefore, this study aims to obtain empirical evidence of the influence of good corporate governance and executive compensation on corporate tax avoidance. This study used 215 banking companies listed on the Indonesia Stock Exchange (IDX) for 2014-2018. This study using a purposive sampling method that produced 119 suitable samples. The analytical method used is multiple linear regression analysis through IBM SPSS Statistics 25 software. Computation of tax avoidance is proxied by computing of Effective Tax Rates (ETR). Good corporate governance is proxied by the size of the board of directors and the audit committee, and executive compensation is proxied by all director compensations. The size of the audit committee is a total of the audit committee in one period. The size of the board of directors is the total of the board committee in one period. This study used ROA and Leverage as a control variable. In this study, it was found that executive compensation and good corporate governance, which was proxied by the Size of the board of directors and the Size of the audit committee shown a positive effect on tax avoidance. Investors who do not want tax avoidance must pay attention to executive compensation and good corporate governance in the company. In contrast, control variables have not significant effect on tax avoidance.

DOES CORPORATE GOVERNANCE AFFECT THE CRITICAL CORPORATE POLICIES SUCH AS DIVIDEND POLICY?

This study examines the influence of corporate governance on dividend policy based on a sample of Canadian firms listed on the S&P/TSX composite index during 2009-2012. The results show that firms with better governance quality, measured by the governance index provided by The Globe and Mail, have larger payouts and have a higher propensity to pay dividends. In terms of four dimensions of corporate governance index, the shareholding and compensation index is the most important determinant of dividend payouts. Our results support the complementary role of corporate governance and dividend policy of the firms. The implication from this study is that managers and board of directors should make dividend payout decisions in a big picture of corporate governance.

The Effects of Corporate Governance and Managerial Compensation on Financial Fraud: Evidence from China

The purpose of this study is to examine whether financial crises influence the effects of manager market competition and cash compensation on the likelihood of listed firms’ fraudulent financial reporting in China. We use a logistic regression model to analyze a very large sample of 1,088 Chinese listed firms from 2008 to 2018. The main findings are as follows: first, manager market competition is negatively associated with the probability of committing fraud. Second, managers’ cash compensation is negatively related to the likelihood of financial fraud. These findings suggest that (1) strong manager market competition can regulate Chinese top managers effectively; (2) higher cash compensation and a good governance mechanism can encourage top managers to deter financial fraud.

Shareholder Governance and CEO Compensation: The Peer Effects of Say on Pay

Abstract We document that firms whose compensation peers experience weak say on pay votes reduce CEO compensation following those votes. Reductions reflect proxy adviser concerns about peers’ compensation contracts and are stronger when CEOs receive excess compensation, when they compete more closely with their weak-vote peers in the executive labor market, and when those peers perform well. Reductions occur following peers’ disclosures of revised pay and are proportional to those needed to retain firms’ relative positions in their peer groups. We conclude that the spillover effects of shareholder voting occur through both learning and compensation targeting channels. (JEL G34, G38, J38, M12, M52) Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Phantom Menace: Role of Pseudo Peers in CEO Compensation

We study the compensation influence of highly central firms (“stars”) in CEO compensation peer networks. We find that lower-profile firms covertly tie CEO compensation to these influential “stars.” We propose a “Herding on stars” hypothesis: lower-profile, agency-prone firms herd on the same set of stars and avoid shareholder scrutiny. Better governance and reputable compensation consultants diminish herding. Herding-driven excess pay does not elicit negative ISS recommendations or shareholder opposition. Herding emerges after the 2006 SEC rule inadvertently identified firms with the greatest compensation influence. Evidence suggests that such herding contributes to the rapid increase in CEO pay at smaller, less visible firms.