Characteristics Of Individual Executives Research Articles

Analysis of the Connection Between Executive Remuneration and Corporate Fiscal Achievement

The interplay between top executive pays and fiscal achievements remains at the forefront of discourse in organizational leadership and governance frameworks. Understanding the connection between executive incentives and performance outcomes is crucial for effective corporate governance. This study dives deep into the tapestry of research that dissects these nuanced interactions. Executive compensation, a critical component of corporate governance, directly influences the behaviors and decision-making of top executives. Simultaneously, financial performance serves as a key indicator of a company's operational health and ability to generate value. According to the analysis, the relationship between both is complete and multifaceted. In some cases, higher levels of executive remuneration are positively correlated with improved financial performance, while negative correlations also exist. The relationship between the two is influenced by characteristics, e.g., corporate governance, industry characteristics, company performance, and individual executive characteristics. Numerous studies are currently available on the relationship between the two. However, it is important to acknowledge the limitations and shortcomings of the existing studies, which may impact the generalizability and applicability of the findings. In conclusion, the nexus between executive compensation and financial output is a complex and multidimensional issue that requires further in-depth research and study.

Consequences of Executive Focus on Support Activities: Evidence from Executive Influence on Firm Tax Strategy

ABSTRACTShould executives solely focus on core activities of the firm? Or is it beneficial to focus on both core and support activities? If core and support activities are substitutes, focusing on both activities will take energy and attention away from core activities. If core and support activities are complements, focusing on both activities may lead to synergies and knowledge spillover. Further, it could be the case that individual executive characteristics impact these relations. Using executive influence on firm tax strategy as a proxy for executive focus on support activities, I find that executive focus on support activities is associated with poorer firm performance and negative executive labor market consequences. These results are partially moderated by executive ability and background. Overall, the results suggest top executives perform best when focused solely on core activities, consistent with core and support activities being substitutes.Data Availability: All data are publicly available as noted in the text.

Do Audit Fees Reflect Unique Characteristics of Individual Executives?

SYNOPSIS We examine whether audit fees reflect characteristics of individual executives incremental to known determinants of fees. Using a novel executive effects approach, we find that unexplained audit fees exhibit a statistically and economically significant association with executive effects after controlling for factors related to the firm and environment. Specifically, executive effects represent between 20 and 39 percent of the total variation in unexplained audit fees. Our tests also show only limited evidence that observable proxies are associated with the auditor's perception of an executive's style, which suggests that our analysis identifies unobservable traits that cannot be captured by typical measures in archival research (e.g., gender, age, educational background, and board membership). Collectively, our study highlights the importance of executive characteristics in the determination of audit fees and suggests that future research may benefit from additional consideration of individual executives' influence on the pricing of audit services. Data Availability: Data used in this study are available from public sources identified in the document.

Do Auditors Respond to Unique Characteristics of Individual Executives? Evidence from Audit Pricing Decisions

Individual executives influence many aspects of corporate performance and financial reporting. In this study, we examine whether auditors observe and respond to characteristics of individual executives by adjusting the price of audit services. Using the group connection method for separating firm and executive effects, we find that unexplained audit fees exhibit a statistically and economically significant association with executive fixed effects after controlling for other factors related to the firm and environment. Our tests show only limited evidence that common, observable proxies are associated with the auditor’s perception of an individual executive’s style. Finally, we observe positive and significant associations between the executive fixed effect coefficients and measures of financial reporting risks and audit report delay, indicating auditors’ decisions to adjust fees for executive traits are related to factors representing audit risk and auditor effort. Our findings highlight the importance of differences across individual executives in the external auditor’s decision-making process.

The influence of individual executives on corporate financial reporting: A review and outlook from the perspective of upper echelons theory

In recent years, numerous studies have investigated whether individual executives and their characteristics relate to financial reporting choices. In this article, we review archival, experimental and survey research on the influence of individual executives on corporate financial reporting and use upper echelons theory as our organizing framework. Our review of 60 studies shows that research consistently finds that top management executives exert significant influence on financial reporting decisions, particularly on disclosure quality. Empirical research has developed promising approaches to investigate executives' psychological attributes and character traits. The results of studies examining the influence of demographic characteristics of individual executives are, however, sometimes contradictory and ambiguous. Nevertheless, the overall empirical results we review are supportive of upper echelons predictions. Additional research in this field is needed to clarify the influence of unexamined upper echelon characteristics, important moderator variables, and adverse selection effects. We also suggest that future research more closely investigates the magnitudes of managerial influence and adopts a more holistic perspective on financial reporting outcomes.

The Role of Managerial Ability in Corporate Tax Avoidance

Most prior studies model tax avoidance as a function of firm-level characteristics and do not consider how individual executive characteristics affect tax avoidance. This paper investigates whether executives with superior ability to efficiently manage corporate resources engage in greater tax avoidance. Our results show that moving from the lower to upper quartile of managerial ability is associated with a 3.15% (2.50%) reduction in a firm’s one-year (five-year) cash effective tax rate. We examine how higher-ability managers reduce income tax payments and find that they engage in greater state tax planning activities, shift more income to foreign tax havens, make more research and development credit claims, and make greater investments in assets that generate accelerated depreciation deductions. Identifying a manager characteristic related to firms’ tax policy decisions adds to our understanding of the factors that explain the substantial variation in corporate income tax payments across firms. This paper was accepted by Mary Barth, accounting.

Individual Executive Characteristics: Explaining the Divergence Between Perceptual and Financial Measures in Nonprofit Organizations

Using survey data collected from chief executives of nonprofit organizations and financial performance information, the current study examined the influence of the individual chief executive characteristics on their perception of organization performance. The study found that executives with internal Locus of Control, high collectivism values, and analytical decision styles have greater convergence between their perceptions of performance and a financial measure. The study findings also offer support for existing theories that suggest executive cognitions play a significant role in filtering information, ultimately influencing the accuracy of perceptions and the effectiveness of strategic choices.

Executive Decisions About Adoption of Information Technology in Small Business: Theory and Empirical Tests

The Theory of Planned Behavior (TPB) was used to explain and predict small business executives’ decisions to adopt information technology (IT). These theories were tested in a multiphase field study involving 162 small businesses (25 ≤ n ≤ 200 employees) from a broad set of industries considering a variety of ITs. Results indicate strong support for a decision process based on attitude (perceived positive and negative consequences for the firm), subjective norm (social expectations), and perceived control (resources to overcome obstacles) regarding IT adoption. Additional variables such as firm and individual executive characteristics had no unique effect on adoption decisions. However, as business size increased, so did the importance of expectations from the (social) environment, while the importance of intra-firm consequences and control over potential adoption barriers declined.