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Marilee Van Zyl and Nadia Mans-Kemp
Companies around the globe increasingly receive immense shareholder scrutiny due to perceivably excessive executive director remuneration. The debate in South Africa intensifies…
Abstract
Purpose
Companies around the globe increasingly receive immense shareholder scrutiny due to perceivably excessive executive director remuneration. The debate in South Africa intensifies due to severe pay inequality. The authors thus accounted for the perspectives of asset managers and listed financial services companies in South Africa pertaining to the impact of voting and engagement on director pay policies and practices.
Design/methodology/approach
Semi-structured interviews were conducted with selected asset managers, chief executive officers, chief financial officers and remuneration committee members of listed financial services companies to gauge their views on the impact of shareholder activism endeavours on remuneration governance. The qualitative data was analysed by conducting thematic analysis.
Findings
Most of the asset managers and financial services representatives preferred proactive, private engagement on pay concerns, given the impact thereof on voting outcomes, and ultimately director remuneration practices and policies. Independent remuneration committees have a prominent role in facilitating engagements with investors to ensure fair remuneration.
Research limitations/implications
The consequences should be clearer if organisations receive substantial votes against their pay policies and implementation reports. South African regulators can consider the “two-strikes” rule to ensure that action is taken in response to shareholder voting on director remuneration matters.
Originality/value
Representatives of asset managers and listed financial services investee companies offered valuable insights on remuneration governance deliberations in an emerging market. This in-depth analysis highlights the importance of proactive engagement to ensure that corporate leaders are paid fairly.
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Gianluca Ginesti, Rosanna Spanò, Luca Ferri and Adele Caldarelli
This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development (R&D…
Abstract
Purpose
This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development (R&D) investment.
Design/methodology/approach
Based on hand-collected data for the CFOs of a sample of the largest European listed companies for the period 2013–2016, this study uses regression analyses to test empirically the association of CFO education, CFO gender and CFO age with R&D investment intensity.
Findings
The presence of female CFOs, CFOs with a Master of Business Administration (MBA) or Doctor of Philosophy (PhD) degree and older CFOs is positively associated with the intensity of R&D investment.
Research limitations/implications
This study relies on some observable characteristics of CFOs and focuses on large listed companies.
Practical implications
The results of this study may help investors, stakeholders and practitioners to understand better which type of CFO characteristics are more likely to result in higher firm-level R&D investment intensity.
Originality/value
This study offers the first insights into the impact of CFOs, as the most prominent C-suite executives, on the level of corporate investments in R&D activity.
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Stefano Azzali and Tatiana Mazza
The purpose of this paper is to analyze the effects of financial restatements (FRs) on the likelihood of the top management team (TMT) dismissal. It investigates the effects of…
Abstract
Purpose
The purpose of this paper is to analyze the effects of financial restatements (FRs) on the likelihood of the top management team (TMT) dismissal. It investigates the effects of types of FRs [corrective note and reissuance of financial statement (RFS)], of FR severity and of FR related to international financial reporting standards (IFRSs) easy or difficult-to-estimate.
Design/methodology/approach
The authors hand-collect: data about 96 FRs from the Italian public oversight board documents; chief executive officer (CEO) name, chairman name, year of the financial statement under investigation, total assets and operating income, from their financial statement. The authors use multivariate regression to test the effects of FRs on the probability of TMT dismissal.
Findings
The authors find that the RFS leads to a higher likelihood of chairman dismissal. A greater magnitude of misrepresentation on income statements, and FRs, which decrease net income, increase the likelihood of CEO dismissal. Difficult-to-estimate IFRSs increases the likelihood of CEO dismissal.
Originality/value
FRs are significant determinants of the CEO/chairman dismissal. The authors show that FRs directly involving shareholders (RFS) have negative consequences on the chairman of the board of directors, while the CEO is more affected by FRs that involve technical factors (FR severity or financial statement associated with difficult-to-estimate IFRSs).
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This study aims to explore the relationship between risk governance characteristics (chief risk officer [CRO], chief financial officer [CFO] and senior directors [SENIOR]) and…
Abstract
Purpose
This study aims to explore the relationship between risk governance characteristics (chief risk officer [CRO], chief financial officer [CFO] and senior directors [SENIOR]) and regulatory adjustments (RAs) in Organization for Economic Cooperation and Development public commercial banks.
Design/methodology/approach
Using principal component analysis (PCA) and regression models, the research analyzes a representative data set of these banks.
Findings
A significant negative correlation between risk governance characteristics and RAs is found. Sensitivity analysis on the regulatory Tier 1 capital ratio and the total capital ratio indicates mixed outcomes, suggesting a complex relationship that warrants further exploration.
Research limitations/implications
The study’s limited sample size calls for further research to confirm findings and explore risk governance’s impact on banks’ capital structures.
Practical implications
Enhanced risk governance could reduce RAs, influencing banking policy.
Social implications
The study advocates for improved banking regulatory practices, potentially increasing sector stability and public trust.
Originality/value
This study contributes to understanding risk governance’s role in regulatory compliance, offering insights for policymaking in banking.
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