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The purpose of this paper is to draw from regulatory focus theory, to examine the effects of the “gain/no gain” nature of stock options and retirement pay on the decision to engage in cross-border acquisitions. The moderating effects of managerial discretion arising from the external industry context and internal organizational leadership structure are also examined.

The authors employ random effects negative binomial regression analysis with a longitudinal (2006–2016) data set of US public companies operating in four industries with differing levels of industry discretion: the oil and gas, paper and packaging, aerospace and defense, and telecommunications.

The findings indicate that both CEO in-the-money stock options and retirement pay are positively related to cross-border acquisition activity. The results also demonstrate that managerial discretion, arising from the firm’s external industry context, accentuates the positive relationship between both the value of CEO in-the-money stock options and retirement pay with cross-border acquisition activity.

The findings provide implication for practice as understanding how retirement pay and stock options, both of which make up a substantial portion of overall CEO pay in the USA, motivate cross-border acquisition activity, may improve decisions by executives. The evidence also provides guidance to boards of directors who are charged with the responsibility of creating CEO compensation contracts.

The paper fills important gaps in the existing research on the influence of compensation elements on firm outcomes, by offering a novel explanation for how in-the-money stock options and retirement pay affect CEOs’ motivations to engage in cross-border acquisitions.

The purpose of this paper is to examine the effects of political orientation on corporate social (ir)responsibility. In specific, it investigates CEO political liberalism, and its moderation with government political liberalism on corporate social responsibility (CSR) and corporate social irresponsibility (CSIR).

Panel regression analysis was conducted using 3,136 firm-year observations of 751 CEOs in the USA.

Results show that the effects of CEO liberalism are positive on CSR and negative on CSIR. During the reign of a democrat president, however, CEO political liberalism shows different impacts on CSR and CSIR. Interactions between the same political orientations are negatively associated with CSR, but not significantly associated with CSIR.

The primary contribution of this paper is in presenting the interactive effects of external environment and CEO attributions on CSIR.

The purpose of this paper is to determine if Chief Executive Officers (CEOs) are rewarded or punished in the corporate director labor market for engaging in corporate social responsibility (CSR) activities.

The authors empirically examine the relation between CEOs' CSR engagement and their corporate board appointments in retirement using logit, ordinary least squares (OLS) and Poisson regression models.

Results indicate that CSR engagement has significant director labor market consequences for retiring CEOs. Specifically, CSR engagement has a favorable impact on the ability of retired CEOs to obtain board seats and board seats at larger firms generally associated with higher pay, even after controlling for firm performance and other determinants previously documented to explain director selection. The authors also find evidence that CEOs of firms with high CSR engagement build up their firms' CSR scores over time as they approach retirement, which is consistent with the labor market for directors providing incentives to attract CEOs to board service in retirement.

By examining the relationship between a CEO's CSR engagement and their external corporate board directorships, this paper advances the understanding of the determinants of corporate board appointments. Further, while most prior research assesses the value of CSR engagement by looking at the relation between CSR engagement and that firm's performance, this is the first study to our knowledge to look outside the firm to determine if CSR engagement has value to the CEO.

This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem.

The author uses a sample of 7,280 firm-year observations from 1998 to 2011.

In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem.

The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

Posits that most studies have found a significant, yet weak, link between the compensation of the CEO and the company’s performance. Herein extends research by focusing on an individual industry, building a model using only data from healthcare organisations. This article tests the relationship using data from 23 healthcare organisations.

The purpose of this paper is to examine the relationship between CEO pay slice (CPS) – the fraction of the top five executive directors’ total compensation that is captured by the chief executive officer (CEO) – and the value of firms in the UK. Specifically, this paper examines whether CPS alters the effectiveness of board performance by influencing cooperation and cohesiveness among its members.

This paper analyses a large sample of non-financial companies listed on the London Stock Exchange from 1997 to 2010. The empirical methodology includes the analysis of panel data by using a dynamic generalized method of moments estimator.

The evidence supports social comparison theory and demonstrates that high CPS is likely to impact negatively on executive team’s spirit and motivation. However, the tournament argument is supported when a subsample of companies with CEOs close to retirement age has been analysed. In addition, the findings suggest that companies perform better after the introduction of non-binding say on pay law in the UK in 2002.

The results have major implications for the on-going debate on how to reform executive remuneration, and highlight the importance of considering remuneration issues at the board level, supporting the principles of UK Corporate Governance Code (Financial Reporting Council, 2010).

The results indicate that CPS can provide a useful tool for research on firm performance, and that its relation with the value of firms is an important issue to be considered in the UK context. The findings also highlight the importance of considering board-wide remuneration issues without narrowing them down simply to the details of CEO compensation.

The purpose of this paper is to assess the association between Chief Executive Officer (CEO) tenure, compensation, and firm's performance.

The paper compares the influence firms' performance on CEOs' cash and total compensation based on the length of tenure. It also examines pay–performance relationship for new CEOs vs those serving their last year in such positions.

The firm size appears to be a significant explanatory variable for CEOs' cash and total compensation regardless of CEOs tenure and measure of performance. Additionally, firms' performance is a significant determinant of cash compensation for CEOs during the first three years of their work as CEOs and not significant for those with 15 years or more as the company's CEO. Both market‐based and accounting‐based performance measures are negatively correlated with CEOs' total compensation regardless of length of experience.

This study did not differentiate routine CEO changes, i.e. normal retirement, from the non‐routine ones. Additionally, the results may be limited by the temporal nature of the sample. Future studies dealing with CEO turnover should cover a longer period of CEO' tenure and examine the nature of CEO's dismissal. Such a research design may provide additional insight to the CEO compensation and influence of performance measures in executive contracts.

This research offers some evidence in support of CEO incentives relative to the length of service as the firm's CEO. The findings indicate differences in pay–performance sensitivities on the basis of CEO's tenure. Comparing the pay–performance relationship for individuals serving their first year and those serving their last year as the firm's CEOs, the paper detects statistically significant differences in influence of performance on cash compensation.

The purpose of this article is to examine whether the design of chief executive officer (CEO) compensation generates incentives to engage in managerial behavior that enhances customer satisfaction and whether these incentives, in turn, lead to higher firm value.

A unique dataset combining customer satisfaction and executive compensation data was used, and the relationship between option sensitivity, customer satisfaction and performance was modeled using simultaneous equations modeling with industry and year fixed effects.

Findings suggest that CEO compensation plays an important role in explaining the variation in customer satisfaction and firm value. Specifically, CEO short-term compensation (salary or bonus) has no affect on customer satisfaction or firm value; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes is positively related and also exhibits an inverted U-shaped relationship with customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts negatively with CEO longevity and industry concentration but positively with advertising expenses in affecting customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to both stock price changes and customer satisfaction positively affect firm value; and the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts positively with customer satisfaction to affect firm value.

This study suffers from several limitations. First, the sample is limited to firms with ACSI scores available. Second, this study is limited to only publicly traded firms, which limits our ability to generalize regarding customer satisfaction, option sensitivity and firm value.

This study has several important implications for researchers and managers. The first is that the corporate board appears to view investment in customer satisfaction as similar to an investment in other intangible assets or technology, in that they reward managers with a nonlinear payoff profile. To encourage managers to invest discretionary funds wisely, incentive compensation is important. Second, compensation committees of corporate boards should not allow the option sensitivity to reach extreme levels because, at some point, managers’ incentives appear to shift more toward short-term earnings objectives and away from investment in intangibles, which have a longer-term payoff. Third, if boards are concerned about customer satisfaction and market value, when designing compensation packages, they should shift their focus from the structure of pay to the sensitivity of pay to performance. The exception to this is that for CEOs with very long tenures (or for those close to retirement), high levels of option sensitivity may distort incentives away from a focus on customer satisfaction. Finally, our results indicate that strategies that enhance customer satisfaction provide an incremental benefit in terms of firm value, beyond incentive compensation strategies.

The results indicate that a “stakeholder focus” which includes customers is value adding for shareholders as well. The results also imply that perhaps using a “balanced scorecard” approach to assessing performance in terms of customer satisfaction outcomes, or at least acknowledging the drives of customer satisfaction explicitly, could be an alternative to using highly sensitive incentive-based compensation when such compensation schemes are less desirable.

Prior research has found that the structure of fixed versus incentive-based compensation impacts customer satisfaction. However, this is one of the first papers to investigate the relationship between the sensitivity of CEO compensation and customer satisfaction. Findings have important implications for boards who seek to structure CEO pay so that CEOs have incentives to enact policies that benefit customers and, in turn, firm performance.

This study aims to examine the unique nature of family firms by investigating the moderating effect of chief executive officer (CEO) identity on CEO career horizon and the auditor’s client risk assessment. Consistent with literature on family businesses, the level of CEO attachment to socio-emotional wealth (SEW) varies among family businesses.

This study used a longitudinal sample of 2,063 non-financial family firm-year observations from 2005 to 2016 listed on the Bursa Malaysia. The study used the general method of moments (GMM), which controls for endogeneity concerns.

The results reveal that, without the moderating effect of CEO identity, the relationship between CEO career horizon and auditor’s risk assessment is positive, which suggests that the auditor’s risk perception of retiring CEOs is very high. However, the interaction of CEO identity reverses the relationship as evidenced by the negative and significant coefficient on the interacted terms. The finding suggests that the auditor’s perceived risk associated with CEO career horizon is lower in family firms with CEOs affiliated to family members or in which the CEO has an equity stake. Overall, the findings provide compelling evidence that the extent of the CEO’s attachment to the firm’s SEW affects the auditor’s client risk assessment.

The findings of the study serve as an enlightenment to policymakers such as Bursa Malaysia and Security Commission that within the family-controlled firms, differences still exist; therefore, there might be a need for future regulatory initiative to cater for the specific need of family-controlled firms.

The study contributes to prior literature by departing from the agency theory adopted in previous studies on auditor choice in family firms under the assumption that family firms are homogenous.

This paper aims to provide greater understanding of how the composition of pay reduces agency cost to the shareholders by examining how firms pay their chief executive officers (CEOs). More specifically, this study examines the relationship between CEOs’ social capital, measured as external directorships, and their contingency pay, the proportion of their compensation that depends on achieving long-term performance goals.

The authors use a panel sample of Standard & Poor 500 CEOs to test two contrasting theoretical perspectives. From a board perspective, boards attempt to retain executives with more social capital working longer for the firms to utilize executives’ social capital and pay them more in the form of contingency pay. The CEO power perspective argues that CEOs wield social capital as a form of power to lower contingency pay in an attempt at preserving wealth.

CEO social capital does not exacerbate agency pressures. Boards reward the long-term benefits of social capital accumulated by CEOs through higher proportions of contingency pay.

The authors considered CEOs of well-capitalized, publicly-traded US-based firms. So the results may not generalizable to other contexts.

Boards do recognize and reward CEOs for their social capital, and use higher levels of contingency pay to lock in CEOs with social capital.

This is the first study to explicitly examine the impact of CEO social capital on both non-equity and equity compensation.