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This aim of this paper is to check whether the incentive role of executive stock options (ESO) depends on their level.

The study is based on data from a sample of 538 American firms over 11 years (1994 to 2004). Using regression analysis, the degree of association between earnings management and the percentage stock options in total compensation for different levels of the stock options granted is determined.

The study finds that ESO decreases the earning management and represents an additional control mechanism. When considering the level of ESO, a long‐term alignment of interests is found at low levels. However, at high levels, ESO becomes an additional source of agency conflict in the short and long runs.

The results confirm the coexistence of both the contractual and the managerial power hypotheses.

This study suggests that the executive compensation strategy and particularly its stock option component should be reviewed.

This study contributes to previous research by underlining the incentive impact of the level of stock options on the role of further incentive compensation.

The purpose of this paper is to examine CEO wealth changes around seasoned equity offerings (SEOs) to explore the shareholder-manager incentive alignment in major corporate equity financing decisions.

The authors decompose CEO wealth into three major components: price effect, board compensation grant, and CEO’s own portfolio adjustment. The authors then compare SEO-event sample vs non-event samples; and evaluate the dynamic and long-run CEO wealth effect.

The authors find when market reacts negatively to SEO announcement leading to losses in CEO’s existing firm-related wealth, CEO gets additional grants to offset the losses. Although this appears to be a rent-seeking activity, the authors find that the additional grants are mainly in the form of stock options which would have no value if stock price failed to pick up in the future. In this sense, the additional grants align the interests between shareholders and managers. Consistent with this argument, the authors show that the additional grants motivate CEOs to promote the stock performance, benefiting themselves as well as shareholders in the long-run.

The study explicitly calculates the contribution of each wealth component to CEO total wealth effect. The results improve the understanding of CEO compensation policy change after major corporate event and contribute to the literature of the optimality explanation of prevailing compensation policy.

The purpose of this paper is to investigate the role of cognitive proximity on supply chain collaboration and how it relates to radical and incremental innovation.

The paper is based on quantitative approach to analyze the data of 218 firms in a developing and transition economy. The proposal model is tested with exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modeling (SEM).

The authors’ findings show that cognitive proximity facilitates decision synchronization and incentive alignment in the supply chain. Furthermore, the authors’ results indicate that information sharing and decision synchronization are determinants of radical innovation while incentive alignment is a determinant of incremental innovation.

This study was cross-sectional, so the authors could not consider the control variable such as sectors or firms’ size. It is hard to control the specific features of cognitive proximity in one single industry when using cross-sectional data. In future investigations, it may be possible to use a different dimension of proximity to explain the implementation of collaboration for innovation.

This study attempted to explore the role of cognitive proximity on supply chain implementation process in the context of a transition economy. Moreover, the authors’ findings provide the clearer understanding of the relationship between collaboration and innovation.

The conventional wisdom regarding the rationale for employee stock ownership plans (ESOPS) holds that such plans provide incentives for improved worker productivity. This view minimizes the employees' portfolio problem inherent in ESOP participation — employment risk for ESOP participants is increased by tying their investment/retirement program to the fortunes of the company in which they are employed. We examine the extent of empirical support for the incentive alignment theory of ESOPs, along with two alternative explanations. One alternative holds that firms initiating ESOP plans signal high investment quality, thus reducing the cost of raising equity capital. Another theory is that ESOPs are a form of coalition, or “devil's pact” between managers and workers in which they agree to prolong and share in perquisite consumption. A large sample of ESOP plans is divided into three categories: anti‐takeover plans, wage concession plans, and “pure” ESOPs. Analysis of pre‐ and post ESOP conditions and stock returns is performed. Among the findings is that pure ESOPs appear to have effects consistent with improvements in worker productivity and/or signaling high investment quality. Strong support for the devil's pact theory is found in the anti‐takeover subcategories of ESOPs.

The main purpose of this paper is to examine the relationships among chief executive officer (CEO) compensation, ownership and firm value. In addition, the determining factors of CEO compensation are examined.

This model is applied to data of the Taiwan stock market for 1995‐2004. The paper applies a two‐stage least squares regression for the panel data model and implements an F‐test, LM test and Hausman test to determine the best statistical method (that is, ordinary least squares method, fix effects model or random effects method).

The results offer some important insights that show CEO compensation, CEO ownership and firm value are interdependent. Firm size, board size, firm value, institution ownership and CEO ownership are positively associated with CEO compensation while firm age, research and development expenditure rates and firm risk are negatively associated with CEO compensation.

The on‐going expansion in the scale of the firm depends on managers having specialized knowledge. In particular, managers are responsible for the firm's entire operational conditions and future investment strategy. Providing an incentive compensation package can reduce agency costs between managers and shareholders. These findings also provide Taiwanese listed companies with a lesson, which suggests that the existence of the monitoring system can reduce the need for incentive alignment.

The study relies on data from publicly traded Taiwan firms, covering a ten‐year period. This study uses a simultaneous equation estimation procedure to investigate the relations among CEO compensation, CEO ownership and firm value. Two proxies for effective monitoring – board size and institutional ownership – are used. The paper attempts to discuss the influence on CEO compensation from the existence of the monitoring system.

Outlines previous research on the role of executive compensation contracts in reducing conflicts of interest between ownership and control; and develops hypotheses on the effects of chief executive officer stock options and share ownership on subsequent firm performance. Suggests that since options do not create losses when share prices decline, they encourage more risk taking than share ownership. Explains the methodology used to test these ideas on 1994‐1996 data for a sample of large US firms and presents the results, which suggest that both stock options and share ownership are positively linked to later firm performance but that the link is stronger for ownership in high risk situations, but lower performance where risk is high. Considers the implications for corporate governance and consistency with other research; and calls for further research.

SMEs especially those in developing countries face a number of challenges that affect their performance and survival in the long run. One of the challenges that has not been widely explored is that of SME supply chain performance. This study attempts to examine the relationship between collaborative relationships and SME supply chain performance in Uganda. SME supply chain performance is an important area because SMEs account for a large percentage of the private sector. Our study established that collaborative relationships explained 29.5 per cent of the variation in SME supply chain performance. Information sharing and incentive alignment were found to be significant predictors of SME supply chain performance while decision synchronization was not a signification predictor. These findings are important and raise implications for theory and managers of SMEs in Uganda.

The internet and web‐based technologies have enabled the integration of information systems across organisational boundaries in ways that were hitherto impossible. The measurement of e‐business (EB) value has been traditionally considered as a single construct. However, the desire to develop a comprehensive understanding of the impact of EB applications from a theoretical perspective has resulted in the modelling of multiple EB constructs. The impact of EB enabled collaboration on operational performance was also investigated. The purpose of this paper is to explore the enabling role of multiple dimensions of EB investigating if all EB applications impact directly and positively on supply chain collaboration.

A web‐based survey was carried out to collect data within the German automotive industry. Structural equation modelling was conducted to test the measurement and structural model.

The results provide justification for the modelling of EB in multiple dimensions. Furthermore, some EB applications impacted positively on supply chain collaboration whilst some did not. The results also proved that EB enabled collaboration impacted directly and positively on the multiple dimensions of operational performance tested.

EB applications cannot be viewed by practising managers as being universally beneficial in improving collaboration across a buyer‐supplier boundary. However, the results reveal that, by carefully selecting the most appropriate EB applications, operations improvement benefits can be realised across a range of operational metrics due to enhanced supply chain collaboration.

The deconstruction of EB into multiple constructs will enable the measurement of EB value to be more accurately assessed. Furthermore, the direct impact of EB‐enabled collaboration to facilitate interaction and integration and its impact on operational performance adds to the body of knowledge within the larger research field of supply chain collaboration.

We investigate the impact of the creation of a new incentive structure for CEOs resulting from firms introducing equity-based compensation (EBC) as a means of paying top executives on policy decisions. Contrasting a firm’s stock and operating performance in the period the CEO is compensated with EBC (EBC period) and the period when EBC is not a component of the same executive’s pay (No EBC period) leads us to conclude that awarding stock options and restricted shares to executives is not associated with improved firm performance. However, firms initiate EBC after superior performance suggesting that CEOs are awarded compensation in this form as a reward for past performance. Firms have higher unsystematic and total risk levels in the EBC period suggesting EBC influences CEOs’ risk-taking behavior and reduces agency costs arising from managerial risk aversion. While there is no change in R&D expenses and cash ratios there is a decrease in capital expenditures in the EBC period, which is consistent with reduced overinvestment agency costs. Finally, leverage and payout ratios are similar in both periods implying that firms’ financing policy is not influenced by changes in CEOs’ compensation structure.

The purpose of this paper is to examine whether managerial ownership‐induced income smoothing accentuates or attenuates an information asymmetry problem. Standard agency theory suggests that managerial ownership may play a significant role in alleviating agency problems between managers and external shareholders that can arise from information asymmetry. According to this view, managerial ownership‐induced income smoothing could convey managerial private information and could, therefore, be considered as informative. However, managerial ownership could also entrench managers with absolute control of firms, and encourage them to engage in earnings manipulation, including earnings smoothing, in order to hide private benefits of control.

The paper uses two smoothing measures, and separate total smoothing into its innate and discretionary components. The former is determined by firm fundamentals, whereas discretionary smoothing allows managers the flexibility to use it for either informative or opportunistic reasons. The paper then regresses information asymmetry, as proxied by scaled bid‐ask‐spreads, on the interaction between managerial ownership and both these smoothing components.

The paper documents that managerial ownership‐induced discretionary smoothing has a positive effect on bid‐ask spreads. This result seems to support the entrenchment view of managerial ownership.

This study offers insights to policy makers interested in enhancing the effectiveness of the managerial ownership aspect of corporate governance in New Zealand.

This paper uses agency theory to provide a comparative assessment of the efficient versus the entrenchment hypotheses with respect to managerial ownership.