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This chapter examines the sensitivity of executive incentive compensation to market-adjusted returns and changes in earnings for high-tech (HT) firms vis-à-vis firms (NHT) in other industries. Consistent with the hypotheses, this chapter uncovers the following evidence: First, the sensitivity of executive bonus compensation to market-adjusted returns is weaker and more symmetric for HT firms than for NHT firms (a control group), which implies that the problem of ex post settling up, documented in Leone et al. (2006), may be far less serious in HT firms than in NHT firms. Second, the sensitivity of executive incentive compensation to earnings changes is generally more symmetric for HT firms than for NHT firms, which is consistent with the view that HT firms engage in more conservative financial reporting than NHT firms. Third, the sensitivity of executive equity-based compensation to market-adjusted returns is significantly negative for HT firms compared to NHT firms when bad earnings news is announced. The results imply that HT firms, with a strong motive to attract and retain their highly talented executives, judiciously use both short-term and long-term incentive compensation schemes by compensating for a reduction of short-term incentive pay with an increase in long-term incentive pay. The issue of executive compensation has been a longstanding one in the United States and Canada, and the issue of executive compensation-performance sensitivity for HT firms is also relevant in this era of the information technology (IT) revolution, especially when prior research has shown that HT firms differ from NHT firms in their market-valuation process.

The purpose of this study is to conduct a comparative analysis of the economic determinants of the compensation for chief executive officers (CEOs) between the pre- and post-financial crisis periods. To conduct the comparative analysis, the authors consider five years before and five years after the financial crisis of 2008. The authors use the data from the US financial service institutions and run separate regressions for the pre- and post-crisis periods to check if there is any significant difference in the economic determinants of executive compensation before and after the financial crisis. The authors find that total compensation and its incentive components decreased significantly in the post-crisis period. In the pre-crisis period, total compensation was determined by stock performance, accounting profit, growth, and leverage, whereas in the post-crisis period stock returns and leverage are the major factors influencing total compensation. The authors also find that firms’ leverage negatively influences the sensitivity of the pay for performance, but the influence of leverage on pay for performance is weaker in the post-crisis period. Our research is significant in the context of the US economy, the regulatory reforms of financial institutions, and the perspectives of the executive compensations. This is the first study that compares the relationship between compensation and firm performance over the pre- and post-crisis periods. It is an explicit attempt to develop a theoretical understanding of the compensation/performance relationship for the financial industry, which is blamed for the financial crisis and is affected by the Dodd–Frank regulation after the crisis.

We analyze corporate governance mechanisms in Canadian and US firms. We show that despite similarities in governance practices in both countries, there are differences in the efficacy of these mechanisms. In particular, the performance of Canadian firms is less sensitive to ownership structure than that of US firms. Differences are also found in the performance implications of incentive pay. Our study suggests that country-specific governance trends persist among Canadian firms cross-listed in the United States. These findings may explain why Canadian firms which are cross-listed in the United States continue to trade at a discount compared to their US counterparts.

This study examines the effects of narcissism and bonus-based incentive plans on managerial decision-making performance. Using an experiment, the authors first examine decision choices under two levels of an incentive threshold (high and low). Narcissism is measured using the Narcissistic Personality Inventory (NPI). Typically, the NPI is used as a single monolithic construct in analyses; however, in this study, the authors subdivide it in two ways to gain more nuanced information about its impact on decision making. First, the authors split the NPI into three levels – high, medium, and low (Hascalovitz & Obhi, 2015), and then decompose it into its adaptive and maladaptive components (Campbell, Hoffman, Campbell, & Marchisio, 2011) to examine how these subdivisions affect performance. Results show that the different levels of incentive thresholds affect performance among narcissistic individuals. Results indicate that individuals higher in narcissism and higher in levels of adaptive and maladaptive narcissism outperform their low-trait counterparts in a lower-threshold environment, but not in a high threshold environment.

The chapter reviews existing research on merger and acquisition (M&A) activities and chief executive officers (CEOs) in organizations. The study provides insights into the existing literature and proposes avenues for future research on M&A activities and CEOs. The present study adopts bibliometric analysis on 319 articles identified from the literature. The articles selected for analysis are extracted from the Scopus database and are selected based on the focus of the papers on M&A activities and CEOs. Existing studies on M&A activities and CEOs demonstrate that CEOs affect M&A activities, CEOs affect the performance of M&A activities, and M&A activities also influence the role of CEOs in M&A activities. We identify and list scientific mapping in trending topics, scientific production, citation analysis, prominent authors, and their affiliations. The study is relevant to academicians, practitioners, and policymakers interested in corporate finance, especially in the areas overlapping CEO attributes and M&A activities.