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1 – 10 of over 1000The paper aims to measure the magnitude of the event-induced return anomaly around bonus issue announcement days in Turkey for recent years. Also, by describing the information…
Abstract
Purpose
The paper aims to measure the magnitude of the event-induced return anomaly around bonus issue announcement days in Turkey for recent years. Also, by describing the information content of these announcements with the current data, the study tries to find out the factors that cause return anomaly in Borsa Istanbul when firm boards release the bonus issue decision.
Design/methodology/approach
The paper conducts event study methodology for detecting market anomaly around bonus issue announcements. For the pairwise comparison purpose, t-test and one-way ANOVA methods are applied to examine if abnormal returns vary according to the information content of the announcements.
Findings
Announcement returns for bonus issues from internal resources outperform the issues that are distributed from last year's net income as bonus shares. Findings indicate different return behaviour among internal resources sub-groups. Findings also suggest that investors in Turkey welcome larger-sized issues, while cumulated returns for the initial offers significantly differ from the latter issues.
Research limitations/implications
Findings are limited to the Turkish equity market. Also, the Public Disclosure Platform of Turkey, which is the main data source of the study, does not provide bonus issue announcements before 2010. Therefore, the previous year's data cannot be included in the analysis.
Originality/value
This paper is novel in terms of considering the main resources of the bonus issue in detail to measure the announcement's impact on stock returns.
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Syed Munawar Shah and Mariani Abdul-Majid
The purpose of this paper is to examine whether reputation element affects the decision relative performance of trust, bonus and incentive contracts using social laboratory…
Abstract
Purpose
The purpose of this paper is to examine whether reputation element affects the decision relative performance of trust, bonus and incentive contracts using social laboratory experiments.
Design/methodology/approach
The study conducts the following lab experiments bonus–incentive treatment without reputation, bonus–incentive treatment with reputation and trust–incentive treatment with reputation.
Findings
The study finds that the reputation and fairness concerns, in contrast to self-interest, may have a decisive impact on the actual and optimal choices in the reciprocity-based contracts. The principal pays higher salaries in the bonus contract as compared to an incentive contract.
Originality/value
The study contributes to the behavioral economic literature in the following dimensions. The existing literature on lab experiments considers a bonus contract as better than the debt contract; however, it does not consider the trust contract better than the debt contract.
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Cuong Le-Van and Nguyen To-The
Total factor productivity (TFP), for a country and for a firm as well, is a crucial element for economic growth by inducing high output. Actually, workers' effort is among the…
Abstract
Purpose
Total factor productivity (TFP), for a country and for a firm as well, is a crucial element for economic growth by inducing high output. Actually, workers' effort is among the important factors that positively influence the TFP.
Design/methodology/approach
In this paper, the authors assume that the wage bonus enhances the worker's effort. Wage bonus is an incentive mechanism and plays a role in the TFP as is shown in a recent paper by Le Van and Pham (2021). The firm will maximize its profits. The supplies of capital and workers are exogenous. At equilibrium, the authors obtain that wage bonus has positive effects on output, labor productivity and price of the output.
Findings
The wage bonus system can make the optimal sequence of outputs grow without bounds. And if the optimal sequence converges to a steady state, this one can be characterized by higher output per capita than that in the steady state without the bonus.
Originality/value
In particular, the result show if, thanks to the wage bonus externality effect, the production may become of increasing returns and if the incentive mechanism is very strong, any optimal path of physical capitals will converge to infinity.
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Dharen Kumar Pandey, Vineeta Kumari and Brajesh Kumar Tiwari
The authors examine the impacts of corporate announcements on stock returns during the pandemic stress.
Abstract
Purpose
The authors examine the impacts of corporate announcements on stock returns during the pandemic stress.
Design/methodology/approach
The authors employ the event study methodology with the market model on a sample of 90 events (announcement and ex-date).
Findings
The authors find that all the corporate announcements do not impact the stock returns in a similar pattern. While the bonus announcement, ex-bonus and ex-split events led to positive significant abnormal returns on the event date, the rights issue and stock-split announcements failed to influence the stock returns. The findings suggest that before making such announcements, the corporates should wait until the market recovers because even the positively impacting events result in negative market responses during pandemic stress.
Practical implications
This study will guide the policymakers to stimulate share prices during such pandemics with the help of various corporate announcements. The investors will be assisted in understanding the stock market mechanism and making wise decisions before reacting to corporate actions during a pandemic or emergency period. While the policymakers are concerned with influencing the share prices, the investors are concerned with the composition of the risk-return parameters in their portfolio. This study will act as an essential investment tool for both.
Originality/value
To the best of the authors’ knowledge, the authors conduct the first-ever study to examine the impacts of corporate announcements during a pandemic stress period that significantly contributes to the literature. The authors examine the announcement effects in India and accurately anticipate that this study will be a pioneer in this field. This study also paves the way for future researches in this area.
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This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in…
Abstract
Purpose
This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in incentive contracts.
Design/methodology/approach
Using hand-collected performance measure data in a sample of S&P 500 firms across the period 1994–2010, this study investigates the sensitivity of CEO bonus and cash pay to shareholder wealth of firms that use non-financial performance (NFPM) measures of varying types and contractual weights in their bonus contracts along with financial measures (NFPM firms) in comparison to that of firms using financial measures only (FPM firms).
Findings
This study finds evidence that the pay-performance sensitivity is stronger in NFPM firms than in FPM firms. These results are driven by the use of CEO individual goals and operational efficiency. Furthermore, when using environmental, social and governance factors, the pay-performance sensitivity is stronger in terms of accounting performance only. This study also finds that using NFPM enhances pay-performance sensitivity more as their contractual weights increase and as financial risk increases.
Practical implications
These findings are important to stakeholders, and especially regulators in understanding incentive effects of alternative performance measures. This study also sheds light on what types of non-financial measures are better in helping firms align CEOs’ incentives to shareholders’ interests.
Originality/value
This study contributes to prior research on benefits of non-financial information within the context of executive compensation. This study presents original results about the effects of contractual weights of non-financial measures and financial risk on CEO pay-performance sensitivity. This study also presents new insights regarding how different types of non-financial measures affect CEO pay-performance sensitivity.
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Marek Bugdol and Piotr Jedynak
The aim of this paper is to show the ways of setting quality objectives, their attributes and the conditions under which they can perform a motivational function.
Abstract
Purpose
The aim of this paper is to show the ways of setting quality objectives, their attributes and the conditions under which they can perform a motivational function.
Design/methodology/approach
Collecting relevant data, the authors used the results of previous research and theoretical assumptions concerning quality objectives. Subsequently, they carried out a survey and exemplification research based on participatory observations, document content analysis and interviews.
Findings
Goals are set mainly by top management, but the communication process itself is insufficient; the needs of system users are not taken into account. In the opinion of the employees, quality objectives are measurable and objective, although not very ambitious. For quality objectives to fulfil a motivational function, they should be objective and measurable. Also, the allocation of tasks among employees needs to be fair. Furthermore, quality objectives have to play a greater role in remuneration systems.
Originality/value
This paper is one of the first publications on the role and function of quality objectives. Its advantage is that it defines the conditions under which such objectives can have a motivational effect and encourage employees to pursue the improvement of their products and services.
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Guy Major and Jonathan Preminger
Both the academic literature and practitioners have long noted the need for an equity investment mechanism for worker-controlled firms that alleviates investor anxieties without…
Abstract
Purpose
Both the academic literature and practitioners have long noted the need for an equity investment mechanism for worker-controlled firms that alleviates investor anxieties without undermining internal workplace democracy. The purpose of this paper is to outline one such possible mechanism.
Design/methodology/approach
The proposal locks together the interests of workers and external investors, via non-voting shares with dividends set by a pre-agreed value-added sharing formula. Each worker is paid a base wage, with the average across the firm being a pre-defined multiple of the national minimum wage. Any additional surplus is split into a number of equal “slices”, with each share receiving one slice as its dividend, and the average worker receiving a pre-agreed number of slices as a bonus.
Findings
Workers have an incentive to maximise their own incomes, and in so doing, will also automatically maximise the dividends received by investors, obviating the need for the shares to have normal voting rights. Working on this principle of aligned interests, the authors also discuss reinvestment, worker ownership of non-voting shares and possibilities for a secondary share market. The authors show how this proposal will be a significant step in aligning the interests of investors with owner-workers in a democratic, negotiated way that shares both risk and returns, thus making worker-controlled firms more attractive to equity investment.
Originality/value
In light of the recognised problem of underinvestment in worker-controlled firms and the risk of their degeneration, this paper will interest both academics and practitioners in employee ownership, co-operatives and various forms of workplace democracy.
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Wasiullah Shaik Mohammed, Mufti Abdul Kader Barkatulla, Mohammed Husain Khatkhatay and Zaffar Abbas
The purpose of this paper is to study the concept of purging and present a comparative study of the existing purging methodologies prevailing in the market with a view to evolving…
Abstract
Purpose
The purpose of this paper is to study the concept of purging and present a comparative study of the existing purging methodologies prevailing in the market with a view to evolving a more effective method of capturing the entire impure income to be purged.
Design/methodology/approach
To illustrate the present discussion, a case study of purging based on numerical examples has been included. The argument has also been supported with empirical data related to the universe of Sharīʿah-compliant stocks listed on Indian stock exchanges.
Findings
During the study, it was found that the existing purging methodologies of calculating impure income to be purged have conceptual and practical shortcomings.
Research implications/limitations
The scope of the current research is limited to calculation of impure income which accrues on account of Sharīʿah non-compliant investments directly or indirectly. It does not try to quantify the benefit which may be imputed in the form of capital gains made in trading of the investee company shares due to higher market value of the shares as a result of the impure income earned by the investee company. The paper has focused on identifying and calculating the impure income on account of interest. Impure income earned from specific Sharīʿah non-compliant products or services has not been considered directly. The reason for this is that companies dealing in such products or services are generally excluded at the business screening stage itself. In the case of those companies which derive a relatively small proportion of their total income from such activities and pass the business screening stage, the quantum of the impure income is not generally reported separately in company accounts.
Practical implications/limitation
The result of adopting the proposed methodology will lead to complete purging of impure income (to the extent that is possible under present Company Law and stock exchange reporting regulations). Implementation of the proposed method requires a proper understanding of the working of listed companies and either a sound mathematical background or access to a software application to calculate the impure income to be purged.
Originality/value
The current paper is original and based on the authors’ personal understanding and experience of providing Sharīʿah consultancy services related to Sharīʿah-compliant investments.
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Abstract
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