Search results

This systematic literature review analyses the determinants and consequences of executive compensation-related shareholder activism and say-on-pay (SOP) votes. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholder pressure as output factor on the other. This procedure identifies the five most important groups of factors in the literature: the level and structure of executive compensation, firm characteristics, corporate governance mechanisms, shareholder structure and stakeholders. Of these, executive compensation and firm characteristics are the most frequently examined. Further examination reveals that the key assumptions of neoclassical principal agent theory for both managers and shareholders are not always consistent with recent empirical evidence. First, behavioral aspects (such as the perception of fairness) influence compensation activism and SOP votes. Second, non-financial interests significantly moderate shareholder activism. Insofar, we recommend integrating behavioral and non-financial aspects into the existing research. The implications are analyzed, and new directions for further research are discussed by proposing 19 different research questions.

This paper aims to analyze the impact that sustainable board governance has on corporate social responsibility (CSR) on the European capital market because of the current debate of future European regulations on the topic.

Based on a legitimacy and stakeholder theoretical framework, the author conducts a structured literature review and includes 86 quantitative peer-reviewed empirical (archival) studies on board gender diversity, sustainability board expertise and sustainability-related executive compensation and their impact on CSR variables.

Gender board diversity represents the most important variable in this literature review. The included categories of sustainable board governance positively influence both the total CSR and environmental outputs.

A detailed analysis of sustainable board governance proxies is needed in future archival research to differentiate between symbolic and substantive use of CSR. In view of the current European reform initiatives on sustainable corporate governance in line with the EU Green Deal project, future research should also analyze the interactions between the included sustainable board governance variables and their contributions to CSR.

As both stakeholder demands’ on CSR outputs and CSR washing have increased since the financial crisis of 2008–2009, firms should be aware of a substantive integration of sustainability within their boards of directors (e.g. because of composition and compensation) to increase their CSR efforts and long-term firm reputation.

This analysis makes useful contributions to prior research by focusing on sustainable board governance as a key determinant of CSR outputs on the European capital market. The European Commission’s future evidence-based regulations [e.g. the corporate sustainability reporting directive (CSRD) and the corporate sustainability due diligence directive (CSDD)] should be promoted.

This paper aims to analyze the governance-related and financial determinants and consequences of corporate social responsibility assurance (CSRA).

Based on a legitimacy theoretical framework and on the business case argument, the author conducts a structured literature review and includes 66 quantitative peer-reviewed empirical (archival) studies on key CSRA proxies (CSRA adoption, choice of CSR assuror and CSRA quality).

In line with the business case for CSRA, the literature review indicates that internal corporate governance, country-related governance and specific financial determinants as reporting, firm size and industry (sensitivity) have a positive impact on CSRA adoption.

A detailed analysis of CSRA proxies is needed in future archival research to differentiate between symbolic and substantive use of CSRA. In view of the current regulatory initiatives on CSR reporting and their decision usefulness, future research should also analyze in greater depth CSRA proxies as moderator and mediator variables.

With regard to the increased stakeholder demand on CSRA after the financial crisis of 2008–2009, firms should be aware of the value-added of CSRA to increase the decision usefulness of their CSR reports and firm reputation.

The analysis makes useful contributions to prior literature by focussing on empirical quantitative (archival) research method, structuring research on the business case for CSRA with respect to its governance and financial determinants and consequences for firms and stressing moderator analysis in archival CSRA research.

The purpose of this paper is to focus on audit committees’ financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).

Based on an agency-theoretical framework, analyses are conducted of data from a sample of UK premium listed companies for the fiscal years 2014–2017 (i.e. 1,319 firm-year observations). Correlation and regression analyses are conducted to evaluate possible associations between FIE in audit committees and KAM readability. The author relies on popular readability measures (Flesch Reading Ease and Fog Index).

Audit committees’ FIE and KAM readability are positively connected. Combined FIE also has a stronger effect than either financial or industry expertise alone.

Companies, regulators and researchers could be significantly affected by the finding that audit committees’ FIE can have a considerable impact on KAM readability.

The analysis of the link between audit committees’ FIE and KAM readability makes a contribution to prior empirical research on KAM.

This paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social responsibility (CSR) and vice versa.

Based on upper echelons theory, the author conducts a structured literature review and evaluates 84 empirical-quantitative studies on CEO and CSR variables.

While the majority of the included studies analyzed the CEO-CSR link, there are indicators for a bidirectional relationship. Moreover, prior research has focused on CEO incentives, especially compensation contracts, and on the US capital market. A major research gap relates to CEO characteristics, e.g. CEO values, education and experience.

Heterogeneous CEO and CSR variables and endogeneity concerns lower the validity of recent studies. Future research is encouraged to implement dynamic regression models, increase CSR and CEO proxies and focus on international samples with country-specific effects.

As CEO activities can have a major impact on CSR activities, the author recommends firms to search for opportunities to make their CSR strategy more comprehensive by their stakeholder communication, thus providing deeper insights into their CSR performance in line with stakeholders’ interests.

The paper is the first literature review on the interaction between CEO and CSR so far. The author explains the main CEO and CSR variables that have been included in research, stresses the limitations of the studies and gives useful recommendations for future research, practice and regulators.

The purpose of this study is to examine the relationship among chief sustainability officer (CSO) expertise, sustainability-related executive compensation (SEC) and biodiversity disclosure (BD).

Based on legitimacy and upper echelons theory, this study uses both random-effects and logit regressions and looks at the 2014–2019 financial years of companies listed on the STOXX Europe 600 (1,992 firm-year observations).

The findings of this study are in line with prior research on sustainable corporate governance and indicate that CSO sustainability expertise significantly increases BD and that SEC strengthens this relationship as a moderating variable. The results of this study are robust to a battery of sensitivity analyses.

This study makes a major contribution to prior analyses, as this appears to be the first on the link among CSO expertise, SEC and BD, as per the author’s knowledge. This study has major implications for business practice, regulators and research.

Based on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial performance is moderated by chief executive officer (CEO) power.

Listed corporations with reference to the German two-tier system (HDAX and SDAX) for the business years 2010-2018 (775 firm-year observations) have been included. Fixed effects panel regression analysis was conducted to analyze the link between ESG performance (in total and its three pillars) and financial performance (ROA), with special reference to the interaction of a CEO power index.

While ESG performance has a positive impact on financial performance, the link is more pronounced by CEO power. Thus, in line with prior research on the one-tier system, CEO incentives can positively contribute to the CSR-business case in the German two-tier system. The results remain constant after conducting several robustness checks.

A key contribution to the empirical CSR literature can be stated, as the moderating role of CEO power in the ESG–financial performance link is rather neglected in prior studies. Thus, corporate governance and sustainability should be classified as interactive aspects for the business case of a successful stakeholder management.

This paper aims to analyse whether and how different types of institutional investors influence shareholder proposal initiations, say-on-pay (SOP) votes and management compensation from a sustainability perspective.

Based on the principal-agent theory, the authors conduct a structured literature review and evaluate 40 empirical-quantitative studies on that topic.

The traditional assumption of homogeneity within institutional investors, which is in line with the principal–agent theory, has to be questioned. Only special types of investors (e.g. with long-term and non-financial orientations and active institutions) run an intensive monitoring strategy, and thus initiate shareholder proposals, discipline managers by higher SOP dissents and prevent excessive management compensation.

A detailed analysis of institutional investor types is needed in future empirical analyses. In view of the current debate on climate change policy, future research could analyse in more detail the impact of institutional investor types on proxy voting, SOP and (sustainable) management compensation.

With regard to the increased shareholder activism and regulations on SOP and management compensation since the 2007/2008 financial crisis, firms should be aware of the monitoring role of institutional investors and should analyse their specific ownership nature (time- and content-driven and as well as range of activity).

To the best of authors’ knowledge, this is the first literature review with a clear focus on institutional investor range and nature, shareholder proposal initiation, SOP and management compensation (reporting) from a sustainability viewpoint. The authors explain the main variables that have been included in research, stress the limitations of this work and offer useful recommendations for future research studies.

This study aims to focus on environmental, social and governance (ESG) performance as a whole and individually in its three pillars and their influence on earnings management.

Companies listed on the German Prime Standard (DAX30, TecDAX and MDAX) for the business years 2011-2017 (548 firm-year observations) are included in the empirical quantitative study. A correlation and regression analysis is conducted to analyze the impact of ESG performance as determined by the Asset4 database of Thomson Reuters on accruals-based earnings management (AEM) and real earnings management (REM).

ESG performance has a negative influence on AEM but not on REM. Moreover, by dividing the three different factors of ESG performance, governance performance has the strongest negative impact on AEM in comparison to environmental and social performance. This study also suggests a bidirectional relationship between ESG performance and earnings management.

The analysis makes a key contribution to research as the link between ESG performance and their three components and earnings management are analyzed for the German two-tier system for the first time. Corporate practice, regulators and researchers should recognize that ESG performance and financial reporting should be discussed together.

Although principal–agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Thus, the purpose of this paper is to examine how existing theories of agency and stewardship can be combined by using behavioral characteristics.

This study reviewed articles on the behavior of agents and stewards from the domains of finance, economics, management, corporate governance and organizational research. Additional theoretical and meta-analytical empirical literature from the fields of psychology and sociology was used to account for general patterns of human behavior.

The results indicate that goal congruency and the perception of fairness can serve as moderators distinguishing agency theory and stewardship theory. Goal congruency can be achieved by stipulating psychological ownership. The perception of distributive and procedural fairness is demonstrated by two major corporate governance mechanisms: performance-based compensation and board monitoring. The results are summarized in six hypotheses that allow a situational, customized corporate governance. These hypotheses can be tested in future research.

Prior work either focused on the merits of principal-agent theory or advocates the utilization of positive management theories, such as stewardship theory. However, little work has been done on bridging the gap between both constructs and develop a more extensive view of management theory.