Executive Pay Dispersion Corporate Governance And Firm Performance

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Executive Pay Dispersion, Corporate Governance and Firm Performance

Author : Kin-Wai Lee
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Executive Pay Dispersion, Corporate Governance and Firm Performance by : Kin-Wai Lee

Download or read book Executive Pay Dispersion, Corporate Governance and Firm Performance written by Kin-Wai Lee and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Much of the research on management compensation focuses on the level and structure of executives' pay. In this study, we examine a compensation element that has not received so far considerable research attention - the dispersion of compensation across managers - and its impact on firm performance. We examine the implications of two theoretical models dealing with pay dispersion - tournament vs. equity fairness. Tournament theory stipulates that a large pay dispersion provides strong incentives to highly qualified managers, leading to higher efforts and improved enterprise performance, while arguments for equity fairness suggest that greater pay dispersion increases envy and dysfunctional behaviour among team members, adversely affecting performance. Consistent with tournament theory, we find that firm performance, measured by either Tobin's Q or stock performance, is positively associated with the dispersion of management compensation. We also document that the positive association between firm performance and pay dispersion is stronger in firms with high agency costs related to managerial discretion. Furthermore, effective corporate governance, especially high board independence, strengthens the positive association between firm performance and pay dispersion. Our findings thus add to the compensation literature a potentially important dimension: managerial pay dispersion.

Pay without Performance

Author : Lucian Bebchuk
Publisher : Harvard University Press
ISBN 13 : 067426195X
Total Pages : 293 pages
Book Rating : 4.6/5 (742 download)

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Book Synopsis Pay without Performance by : Lucian Bebchuk

Download or read book Pay without Performance written by Lucian Bebchuk and published by Harvard University Press. This book was released on 2006-09-30 with total page 293 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

Corporate Governance Antecedents of Top Management Pay Dispersion that Undermines Firm Performance

Author : Sarah Burrows
Publisher :
ISBN 13 :
Total Pages : 61 pages
Book Rating : 4.:/5 (113 download)

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Book Synopsis Corporate Governance Antecedents of Top Management Pay Dispersion that Undermines Firm Performance by : Sarah Burrows

Download or read book Corporate Governance Antecedents of Top Management Pay Dispersion that Undermines Firm Performance written by Sarah Burrows and published by . This book was released on 2018 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using social comparison and social network theory, I sought to examine the corporate governance antecedents of top management team (TMT) horizontal pay dispersion that may be interpreted as unjustifiable reasons of pay dispersion and therefore undermine firm performance. I therefore examined compensation data from firms appearing on the S&P500 from 2008 to 2013 and ran panel regressions. This paper adds to the existing literature, as it is one of the first studies to explicitly examine the corporate governance mechanisms that affect TMT pay dispersion. I hope these findings can remedy the continuance of ineffective compensation practices which lead to unjustified pay dispersion among executives and in turn harm firm performance.

Research Handbook on Executive Pay

Author : John S. Beasley
Publisher : Edward Elgar Publishing
ISBN 13 : 1781005109
Total Pages : 553 pages
Book Rating : 4.7/5 (81 download)

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Book Synopsis Research Handbook on Executive Pay by : John S. Beasley

Download or read book Research Handbook on Executive Pay written by John S. Beasley and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 553 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay. The authors analyze the two dominant theoretical approaches – managerial power theory and optimal contracting theory – and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed. A timely study of a controversial topic, the Handbook will be an essential resource for students, scholars and practitioners of law, finance, business and accounting.

Executive Remuneration and Employee Performance-Related Pay

Author : Tito Boeri
Publisher : OUP Oxford
ISBN 13 : 0191648582
Total Pages : 311 pages
Book Rating : 4.1/5 (916 download)

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Book Synopsis Executive Remuneration and Employee Performance-Related Pay by : Tito Boeri

Download or read book Executive Remuneration and Employee Performance-Related Pay written by Tito Boeri and published by OUP Oxford. This book was released on 2013-03-28 with total page 311 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent financial crisis has created a public outcry over top-executive pay packages and has led to calls for reform of executive pay in Europe and the US. The current controversy is not the first - nor will it be the last - time that executive compensation has sparked outrage and led to regulation on both sides of the Atlantic. This volume compares US and European CEOs to trace the evolution of executive compensation, its controversies and its resulting regulations. It shows that many features of current executive compensation practices reflect the, often-unintended, consequences of regulatory responses to perceived abuses in top-executive pay, which frequently stem from relatively isolated events or situations. Regulation creates unintended (and usually costly) side effects and it is often driven by political agendas rather than shareholder value. Improvements in executive compensation are more likely to come from stronger corporate governance, and not through direct government intervention. The volume also examines the effects of incentive schemes and the patterns of performance related pay both within and across countries. It documents a number of empirical regularities and discusses whether government should intervene to support the implementation of incentive pay schemes. It argues that it makes little sense to undertake reform without detailed simulations of the effect on the economy under alternative economic scenarios, based on sound analysis and extensive discussion with labour, management, and government decision-makers.

Responsible Executive Compensation for a New Era of Accountability

Author : Peter T. Chingos
Publisher :
ISBN 13 :
Total Pages : 328 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis Responsible Executive Compensation for a New Era of Accountability by : Peter T. Chingos

Download or read book Responsible Executive Compensation for a New Era of Accountability written by Peter T. Chingos and published by . This book was released on 2004-03-25 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt: Publisher Description

A Unified Analysis of Executive Pay

Author : Eli Talmor
Publisher :
ISBN 13 :
Total Pages : 45 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis A Unified Analysis of Executive Pay by : Eli Talmor

Download or read book A Unified Analysis of Executive Pay written by Eli Talmor and published by . This book was released on 2003 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines executive compensation determinants in the U.S. financial services sector. Multiple theories of executive pay are discussed and tested using a relatively homogenous sample. We perform an in-depth look at the corporate governance and ownership structure of the companies selected. The analysis is conducted for the financial sector as a whole and for each of three sub-groups: commercial banks, brokerage and other non-depository institutions, and insurance companies. Variables that proxy for managerial strategic discretion and task complexity are found to best explain CEO compensation. Corporate governance, including board characteristics and external ownership, is the second leading determinant of pay variation, while firm performance and CEO specific characteristics seem to play the least role. We explore the simultaneous relationship between compensation, firm performance, and board strength and find evidence that the board of directors provides a monitoring function and that a strong board appears to be a substitute with incentive compensation for aligning incentives. These findings, when viewed with subsequent firm performance, support an efficient contracting argument.

Determinants and Implications of Executive Pay Dispersion and Compensation to Investor Relations Officers

Author : Sanghyuk Byun
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (89 download)

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Book Synopsis Determinants and Implications of Executive Pay Dispersion and Compensation to Investor Relations Officers by : Sanghyuk Byun

Download or read book Determinants and Implications of Executive Pay Dispersion and Compensation to Investor Relations Officers written by Sanghyuk Byun and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: "This dissertation consists of two essays. The first chapter of this dissertation examines the relation between pay dispersion among top executives and firm performance, executive turnover, and earnings management ... The second chapter of this dissertation investigates a sample of larger publicly-traded US companies with a designated investor relations (IR) executive, who is among the top five paid employees."--Page iii.

Executive Compensation, Firm Performance and Liquidity Under Imperfect Corporate Governance

Author : Yongli Luo
Publisher :
ISBN 13 :
Total Pages : 374 pages
Book Rating : 4.:/5 (831 download)

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Book Synopsis Executive Compensation, Firm Performance and Liquidity Under Imperfect Corporate Governance by : Yongli Luo

Download or read book Executive Compensation, Firm Performance and Liquidity Under Imperfect Corporate Governance written by Yongli Luo and published by . This book was released on 2012 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Incentives for Helping on the Job

Author : Gerald T. Garvey
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Incentives for Helping on the Job by : Gerald T. Garvey

Download or read book Incentives for Helping on the Job written by Gerald T. Garvey and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent advances in incentive theory stress the multi- dimensional nature of agent effort and specifically cases where workers affect one another's performance through "helping" efforts. This paper models helping efforts as determined by the compensation package and task allocation. The model is tested with Australian evidence on reported helping efforts within workgroups. The evidence consistently supports the hypothesis that helping efforts are reduced, while individual efforts are increased, when promotion incentives are strong. Piece rates and profit-sharing appear to have little effect on helping efforts. Contrary to the predictions of some recent theoretical models, task variety and helping efforts are positively correlated.

The Regulation of Executive Compensation

Author : Kym Maree Sheehan
Publisher : Edward Elgar Publishing
ISBN 13 : 0857938339
Total Pages : 255 pages
Book Rating : 4.8/5 (579 download)

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Book Synopsis The Regulation of Executive Compensation by : Kym Maree Sheehan

Download or read book The Regulation of Executive Compensation written by Kym Maree Sheehan and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 255 pages. Available in PDF, EPUB and Kindle. Book excerpt: ïBased on extensive interviews with those directly involved in the executive pay setting process _ executives themselves, remuneration committee members, remuneration consultants, and institutional investors _ this excellent study finally explains how, despite repeated regulation over the past twenty years in both the UK and Australia, limits on the amount executives get paid, and a clear relationship between pay and performance remain as elusive as ever. Dr. SheehanÍs study suggests that by targeting the pay setting process rather than pay itself, regulation may have contributed, albeit unintentionally, to the endless upward ratcheting of absolute levels of executive pay.Í _ John Roberts, University of Sydney, Australia ïFor those that believe executive remuneration in the UK and Australia is too high and poorly aligned with company performance, this book provides an excellent analytical framework and strong arguments in favor of greater shareholder oversight of remuneration practices and pay levels. It is well-written, carefully argued and persuasive in its treatment of the subject. I wholeheartedly recommend it.Í _ Randall S. Thomas, Vanderbilt University Law School, US In this timely book, Kym Sheehan examines the regulatory technique known as ïsay on payÍ _ where shareholders vote on executive compensation in an annual, advisory vote on the remuneration report. Using the model of the regulated remuneration cycle, and drawing upon evidence of its operation from interviews, voting data and remuneration reports from UK and Australian companies, the book demonstrates whether say on pay can operate successfully to both constrain executive greed and ensure accountability exists for company performance and decision-making. The Regulation of Executive Compensation is essential reading for corporate governance academics, remuneration consultants, company directors, regulators, pension and superannuation fund trustees and unions. Politicians and their policy advisers, lawyers, accountants and anyone concerned about the corporate governance of listed companies will find much to interest them in this detailed study.

Executive Compensation and Corporate Governance in the U.S.

Author : Steven Neil Kaplan
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (81 download)

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Book Synopsis Executive Compensation and Corporate Governance in the U.S. by : Steven Neil Kaplan

Download or read book Executive Compensation and Corporate Governance in the U.S. written by Steven Neil Kaplan and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, I consider the evidence for three common perceptions of U.S. CEO pay and corporate governance: (1) CEOs are overpaid and their pay keeps increasing; (2) CEOs are not paid for performance; and (3) boards do not penalize CEOs for poor performance. While average CEO pay increased substantially through the 1990s, it has declined since then. CEO pay levels relative to other highly paid groups today are comparable to their average levels in the early 1990s. In fact, the relative pay of large company CEOs is similar to its average level since the 1930s. The ratio of large company CEO pay to firm market value also has remained roughly constant since 1960. This suggests that similar forces, likely technology and scale, have played a meaningful role in driving CEO pay and the pay of others with top incomes. With regard to performance, CEOs are paid for performance and penalized for poor performance. Finally, boards do monitor CEOs. The rate of CEO turnover has increased in the 2000s compared to the 1980s and 1990s, and is significantly tied to poor stock performance. While corporate governance failures and pay outliers as well as the very high average pay levels relative to the typical household undoubtedly have contributed to the common perceptions, a meaningful part of CEO pay appears to be market determined and boards do appear to monitor their CEOs. Consistent with that, top executive pay policies at over 98% of S&P 500 and Russell 3000 companies received majority shareholder support in the Dodd-Frank mandated Say-On-Pay votes in 2011.

Pay Dispersion Ownership Structure and Firm Performance in China's Listed Firms

Author : Xiaofei Pan
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Pay Dispersion Ownership Structure and Firm Performance in China's Listed Firms by : Xiaofei Pan

Download or read book Pay Dispersion Ownership Structure and Firm Performance in China's Listed Firms written by Xiaofei Pan and published by . This book was released on 2016 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates pay dispersion and its effects on firm performance in China's listed firms. Due to weak investor protection and an inefficient legal system, China is expected to have a lower level of corporate governance. In this weak institutional environment, we argue that awarding sufficient power and high pay to CEOs is helpful to increase firm performance. Using data from 2002 to 2007, we find that pay dispersion is related to tournament incentives and agency factors. Importantly, we find evidence that pay dispersion is positively related to firm performance which is consistent with our primary hypothesis. In addition, the relation is more positive when the firm is controlled by the state. Our results are robust to corrections for endogeneity between pay dispersion and firm performance and to several alternative measures of pay dispersion and firm performance.

The Handbook of the Economics of Corporate Governance

Author : Benjamin Hermalin
Publisher : Elsevier
ISBN 13 : 0444635408
Total Pages : 762 pages
Book Rating : 4.4/5 (446 download)

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Book Synopsis The Handbook of the Economics of Corporate Governance by : Benjamin Hermalin

Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Executive Compensation, Firm Performance and Corporate Governance

Author : Aditya Parthasarathy
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Executive Compensation, Firm Performance and Corporate Governance by : Aditya Parthasarathy

Download or read book Executive Compensation, Firm Performance and Corporate Governance written by Aditya Parthasarathy and published by . This book was released on 2006 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the determinants of executive compensation using the most recent data on firm performance, corporate governance and managerial compensation for a large sample of Indian firms. A linear regression model is used to develop explanations for total CEO compensation and the proportion of incentive pay that forms a part of the CEO's compensation. It is found that firm size is a significant determinant of both these aspects of CEO compensation. The results also show that CEOs who are promoters of their firms earn significantly more than ordinary CEOs. Such individuals also earn a much larger component of their compensation as incentive pay. In addition, this study also quantifies the significant divergences in compensation policies that are followed at firms in the public sector when compared to private sector firms.

The Other Side of the Tradeoff

Author : Andrew Samwick
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (75 download)

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Book Synopsis The Other Side of the Tradeoff by : Andrew Samwick

Download or read book The Other Side of the Tradeoff written by Andrew Samwick and published by . This book was released on 1998 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The principal-agent model of executive compensation is of central importance to the modern theory of the firm and corporate governance, yet the existing empirical evidence supporting it is quite weak. The key predication of the model is that the executive's pay-performance sensitivity is decreasing in the variance of the firm's performance. We demonstrate strong empirical confirmation of this prediction using a comprehensive sample of executives at large corporations. In general, the pay-performance sensitivity for executives at firms with the least volatile stock prices is an order of magnitude greater than the pay-performance sensitivity for executives at firms with the most volatile stock prices. This result holds for both chief executive officers and for other highly compensated executives. We further show that estimates of the pay-performance sensitivity that do not explicitly account for the effect of the variance of firm performance are biased toward zero. We also test for relative performance evaluation of executives against the performance of other firms. We find little support for the relative performance evaluation model. Our findings suggest that executive compensation contracts incorporate the benefits of risk-sharing but do not incorporate the potential informational advantages of relative performance evaluation

Executive Compensation and Corporate Governance in China

Author : Martin J. Conyon
Publisher :
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Executive Compensation and Corporate Governance in China by : Martin J. Conyon

Download or read book Executive Compensation and Corporate Governance in China written by Martin J. Conyon and published by . This book was released on 2014 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate executive compensation and corporate governance in China's publicly traded firms. We also compare executive pay in China to the USA. Consistent with agency theory, we find that executive compensation is positively correlated to firm performance. The study shows that executive pay and CEO incentives are lower in State controlled firms and firms with concentrated ownership structures. Boardroom governance is important. We find that firms with more independent directors on the board have a higher pay-for-performance link. Non-State (private) controlled firms and firms with more independent directors on the board are more likely to replace the CEO for poor performance. Finally, we document that US executive pay (salary and bonus) is about seventeen times higher than in China. Significant differences in US-China pay persist even after controlling for economic and governance factors.