Search results

Prior research on the structure‐performance relationship has not investigated all of the relevant relationships among market structure, profits, prices, and explicitly calculated measures of firm efficiency. This paper replicates the four approaches in the literature, adds several innovations, and applies the analysis to banking data. We find more support for the structure‐conduct‐performance hypothesis than for the relative‐market‐power and efficient‐structure hypotheses, although the data are not fully consistent with any of these theories. We also find support for Hick's quiet‐life hypothesis, which implies that firms with market power adhere less rigorously to efficiency maximization. J.E.L. Classification Numbers G21, G28, L41, L89 The opinions expressed do not necessarily reflect those of the Board of Governors or its staff. The authors thank Dean Amel, Jim Berkovec, Myron Kwast, Nellie Liang, LenNakamura, Steve Rhoades, and participants in the meeting of the Federal Reserve System Committee on Financial Structure and Regulation for helpful comments, and Ken Cavalluzzo, Jalal Akhavein, John Leusner, and Seth Bonime for outstanding research assistance.

The purpose of this paper is to examine the determinants of CEO compensation for sample of the US firms. It emphasizes the presence of executive compensation persistence and the importance of CEO power besides performance while setting CEO pay.

The empirical analysis is conducted on a large sample of US firms during the period 2006–2016. It is based on the generalized method of moments (GMM) models to assess the impact of numerous factors on CEO compensation.

The main findings reveal that firm performance proxied by accounting-based proxies, as well as market-based proxies, plays a significant role in explaining variations in levels of executive compensation. Moreover, there is a significant persistence in executive compensation among the US sample firms. The authors also document that poor governance conditions (managerial power hypothesis) lead to high compensation levels offered to CEO.

At the end, without a doubt, the analysis has some limitations that prompt the authors to consider future research directions. One future research avenue that can help better explain the effect of firm performance on the CEO compensation is to study this issue using an international sample to determine whether country-level characteristics (e.g. creditor rights, shareholder rights and the enforcement climate) can influence this relationship. Furthermore, it can be worthwhile to deepen the analysis of CEO power and its impact on CEO compensation. It will be interesting to emphasize how the CEO power interacts with the other governance characteristics and some CEO attributes as CEO gender.

The paper's findings have implications for practitioners, policymakers and regulatory authorities. First, the findings inform regulators that performance is not the only determinant of CEO pay level. This may warrant increased firm disclosure of the details of the pay structure. Second, the study offers insights to policymakers and members of boards of directors interested in enhancing the design of executive compensation and internal corporate governance, to better align managerial incentives to shareholder interests. Firms should strengthen the board independence and properly constitute the board committees (compensation, risk, nomination…).

This paper presents a comprehensive overview of the CEO compensation determinants. It supplements the classic pay-for-performance sensitivity predictions with insights gained from the dynamics of wage setting theory and managerial power theory. The authors develop a composite index to measure the CEO power in order to test the impact of CEO attributes on CEO pay. Additionally, it verifies whether the determinants of CEO pay depend on firm age and size.

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.

Previous empirical research interprets results from pay‐performance studies in the light of either agency theory or managerial power theory. This paper aims to directly estimate the relationship between CEO power, and compensation structure, level, and performance‐sensitivity. In doing so, it seeks to test the crucial assumption in managerial power theory according to which more powerful CEOs are able to enjoy higher and less performance‐sensitive compensation.

The hypotheses are tested on a detailed dataset, covering compensation for CEOs in virtually all Dutch stock‐listed companies, for the period 2002‐2006. The paper tests whether the findings are robust against different lag structures and firm size classes.

In general, most of the multi‐dimensional measures of power do not appear to have a strong effect on compensation, with one exception: non‐Dutch CEOs receive more variable compensation, and receive higher and less performance‐sensitive pay than their Dutch colleagues.

This paper contributes to the extant CEO compensation literature, which to date relies on interpretations of findings in pay‐for‐performance studies to argue for either agency or managerial power theory. The direct test of the relationship between power and compensation emphasises the importance of one dimension of a multidimensional power construct. As strong effects of performance of compensation are not found either, the paper suggests that the bipolar debate be extended to include other explanations of compensation arrangements.

The purpose of this paper is to investigate the crucial question of whether gender diversity in boardroom is associated with CEO pay and CEO pay-performance link.

The authors used the data of companies listed on the Pakistan Stock Exchange for a sample consisting of KSE-100 index companies for the period of five years. The authors used the ordinary least square regression technique to test the developed hypotheses. The authors also used the two-step Heckman selection model, two-stage least square regression and propensity score matching method to control the problem of endogeneity.

The authors find reliable evidence of a negative association between gender diversity and CEO pay and of board gender diversity’s strengthening the relationship between CEO pay and firm performance. The authors also find that women director are more effective in setting the optimal contract in non-family-owned firms and firms with dispersed ownership structure as compared to family-owned firms and firms with concentrated ownership structure. Moreover, results also reflect that the influence of board diversity on both CEO pay and CEO pay-performance link is stronger when gender diversity goes beyond tokenism.

The findings have implications in terms of providing the basis for policy makers to accord the same level of importance to gender diversity in the boardroom as well as contributing to the current debate on the desirability of mandating or recommending gender diversity on boardrooms.

This study is among the few studies which investigate the moderating role of boardroom gender diversity on the CEO pay-performance link. In addition, this study contributes to the institutional theory by providing the empirical evidence that the effect boardroom gender diversity on CEO pay and CEO pay-performance link varies by type of ownership.

The purpose of this study is to analyze the CEO compensation sensitivity to firm performance, termed as the pay-for-performance sensitivity (PPS) in the Tunisian context and to test the robustness of this relationship when corporate governance (CG) mechanisms are considered.

The consideration of past executive pay as one of the explanatory variables makes this estimation model a dynamic one. Furthermore, to avoid the problem of endogeneity, this study uses the system-GMM estimator developed by Blundell and Bond (1998). For robustness check, this study aims to use a simultaneous equation approach (three-stage least squares [3SLS]) to estimate the link between performance and CEO pay with a set of CG mechanisms to control for possible simultaneous interdependencies.

Using a sample of 336 firm-years from Tunisia over the 2009–2015 periods, this study finds strong evidence that the pay-performance relationship is insignificant and negative, and it becomes more negative or remains insignificant after introducing CG mechanisms consistently with the managerial power approach. The findings are robust to the use of alternative performance measures. This study provides new empirical evidence that CEOs of Tunisian firms abuse extracting rents independently of firm performance.

This study contributes to the unexamined research on PPS in a frontier market. This study also shows the ineffectiveness of the Tunisian CG structure and thus recommends for the legislator to impose a mandatory CG guide.

Extensively public concern on “Huge Executive Compensation” makes it urgent to investigate the reasonability of high executive compensation. The purpose of this paper is to explore the effectiveness of compensation contracting based on the specific responsibility of executives. More specifically, this paper is to examine whether high compensation is helpful to mitigate agency problems.

Considering that board secretaries of listed companies are responsible for information disclosure in China, this paper examines the effect of board secretaries’ excess compensation on firms’ disclosure quality using listed company data from 2007 to 2015. The first measure of disclosure quality is based on the disclosure violation behavior of firms, and the second is KV value that represents the extent to which the investors relay on the stock trading volume. To provide additional confidence that the findings are robust, this paper further conducts two indirect tests based on rumors and cost of equity capital.

The results show that board secretaries’ excess compensation is negatively associated with the probability of information disclosure violation and also negatively associated with firms’ KV value, suggesting firms that pay high compensation to their information providers are more likely to provide high-quality disclosures. Besides, this paper further finds that board secretaries’ excess compensation is negatively related to the incidence of rumors, the number of rumors incurred or the cost of equity capital.

Overall, the findings provide support to the efficient contracting of executive compensation, which implies that highly paid board secretaries would be better information providers than those poorly paid.

This paper provides empirical evidence that firms’ disclosure quality can be improved by modifying the compensation contract of information providers. This may indicate a new way to improve the quality of disclosures, so as to mitigate the agency problem.

In spite of the public criticism on executive excess compensation, the high compensation is not always a signal of manipulation, collusion and self-interest. It also can be a signal of individual talents and great efforts. Board secretaries are worth to be highly paid if they can improve firms’ disclosures, thereby reducing the incidence of rumors and reducing the cost of equity capital.

This paper is the first research to examine the effectiveness of compensation contracting based on information providers’ disclosure responsibility in the Chinese context. It documents a positive relation between board secretaries’ excess compensation and corporate disclosure quality.

The purpose of this paper is to explore the effects of total assets, stock performances, CEOs’ tenures, ages, and board sizes on total CEO compensations of 249 publicly listed US companies over a nine-year period from 2004-2012.

Pedroni’s panel cointegration, generalized method of moments, and dynamic ordinary least squares methodologies are applied.

All variables are non-stationary in log-levels. The findings show significant positive effects of total assets and stock performances on total CEO compensations. The effects of CEO’s tenure and age as well as board size on total CEO compensation deem negative. However, short-run net interactive feedback effects are generally positive with some exceptions.

The above variables matter in rewarding the CEOs. They should be carefully weighed in for proper formulation of CEO compensation policy.

This paper applies relatively new econometric tools for a large panel data set. This work considers some new variables for determining CEO compensation in USA. The findings are relatively new with empirical originality.

This paper aims to investigate the relationship between board of directors' independence and executive compensation disclosures transparency.

The paper examines compensation disclosure practices of a sample of 181 firms listed on the Toronto Stock Exchange. Board independence from management is assessed through an aggregate score which takes into account the proportion of independent directors, board leadership structure (i.e. CEO is the board chairperson), and the existence and independence of board committees. A cross‐sectional regression analysis is used to examine the relationship between board independence and the extent of compensation disclosure.

The paper finds that board independence from management is positively related to the transparency of executive compensation‐related information. In addition, this study documents a positive (negative) relation between firm size, US cross‐listing, growth opportunities (leverage) and the extent of executive compensation disclosure.

The study's results provide support to the managerial opportunism hypothesis in executive compensation. These findings highlight the importance of the board of directors as an effective governance mechanism which limits managerial rent‐seeking in the design as well as the disclosure of executive compensation practices.

This paper extends prior disclosure studies by examining the impact of board characteristics on the transparency of executive compensation disclosures in a principles‐based governance regime. Furthermore, executive compensation disclosure provides an interesting setting in which to examine the ability of the directors to act independently from managers in a conflict of interests situation.

The literature on corporate governance has experienced an explosive growth in the past decade and presented some new trends. One purpose of this paper is to make an exploratory survey of this. Since China is a typically emerging and transition economy, another purpose of this paper is to review some domestic studies with an intention to discover the evolution logic of corporate governance practices in China under a complicated and exclusive context, the third purpose is to provide future research directions.

This paper surveys recent literature in the field of corporate governance, intending to find out the development trends and extract the main line of literature on and practices of Chinese corporate governance.

In this paper, we find that recent literature on corporate governance provides some new insights into subtle characteristics of governance, governance effects of relational network, political connections, corporate governance evaluation and financial institutions governance. During the past decade, the literature on Chinese corporate governance has referred to some new areas during the transition process from administrative governance to economic governance. In addition to the above, we attempt to put forward an analytical framework and the proposition that Chinese corporate governance is in the transition process from administrative governance to economic governance.

The authors propose some research topics where future studies on corporate governance may prove valuable, especially putting forward an analytical framework which can be used for discussing and analyzing corporate governance in China.

This paper reviews some new trends of literature on corporate governance and makes a contribution to corporate governance studies by providing fruitful directions, extracting the main line and analytical framework for China's mode during the transition process from administrative governance to economic governance.