Journal articles on the topic 'Executive (CEO and Board)'
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1
Hitt, Michael, and Katalin Takacs Haynes. "CEO overpayment and underpayment: executives, governance and institutions." Management Research: Journal of the Iberoamerican Academy of Management 16, no. 1 (April 9, 2018): 38–46. http://dx.doi.org/10.1108/mrjiam-09-2017-0781.
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Purpose Based on the findings of Aguinis et al. (2018) that only a few executives are properly compensated, the purpose of this paper is to examine potential causes and consequences of CEO overpayment and underpayment. Ineffective compensation of the CEO represents a governance failure by the board of directors. Better understanding the reasons for such failures may help boards to correct their processes and to enact more effective governance. Boards must look beyond the normally constrained focus of agency theory to examine executive characteristics and motivation. Thus, tailoring compensation plans and governance to the executive and organizational context requires attention to a broader set of theoretical notions. Design/methodology/approach Using the Aguinis et al. (2018) work, this paper conceptually identifies and explains the causes and consequences of CEO overpayment and underpayment along with their implications for governance and future research. Findings This paper identifies potential reasons for CEO overpayment and underpayment. For example, in addition to poor hiring decisions and inadequately designed compensation plans, CEO overpayment can occur because of executive hubris and greed. Alternatively, CEO underpayment may occur because of a poorly designed plan, inadequate information about the external labor market and the executive’s interests in non-pecuniary benefits (e.g. socio-emotional wealth, altruism). Without proper monitoring and oversight by the board, firm performance commonly suffers. Originality/value This work extends our understanding of why CEOs may be overpaid (e.g. hubris, greed) and why some executives may accept underpayment (e.g. desire for non-pecuniary benefits from SEW or altruism). This paper explains the consequences of ineffective corporate governance practices that allow inefficient CEO compensation. Finally, this paper explores several contingencies that can affect the governance practices and research needed to enhance our knowledge of this important area.
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Meng, Xiaojing, and Jie Joyce Tian. "Board Expertise and Executive Incentives." Management Science 66, no. 11 (November 2020): 5448–64. http://dx.doi.org/10.1287/mnsc.2019.3355.
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We investigate how board expertise affects chief executive officer (CEO) incentives and firm value. The CEO engages in a sequence of tasks: first acquiring information to evaluate a potential project, then reporting his or her assessment of the project to the board, and finally implementing the project if it is adopted. We demonstrate that the CEO receives higher compensation when the board agrees with the CEO on the assessment of the project. Board expertise leads to (weakly) better investment decisions and helps motivate the CEO's evaluation effort; however, it may induce underreporting and reduce the CEO's incentives to properly implement the project. Consequently, if motivating the CEO to evaluate projects is the major concern (e.g., innovative industries), board expertise exhibits an overall positive effect on firm value; however, if motivating the CEO to implement projects is the major concern (e.g., mature industries), board expertise can harm firm value. This paper was accepted by Shiva Rajgopal, accounting.
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Shin, Taekjin. "The Gender Gap in Executive Compensation." ANNALS of the American Academy of Political and Social Science 639, no. 1 (December 15, 2011): 258–78. http://dx.doi.org/10.1177/0002716211421119.
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While many studies have explored the issue of women’s representation among top management, little is known about the gender gap in compensation among those who reached the top. Using data on 7,711 executives at 831 U.S. firms, this study investigates social-psychological factors that explain the gender gap in executive compensation. Consistent with theories on social identity and demographic similarity effects, the gender gap in executive pay is smaller when a greater number of women sit on the compensation committee of the board, which is the group responsible for setting executive compensation. However, the presence of a female chief executive officer (CEO) is not associated with the compensation of female non-CEO executives working under the female boss. The findings highlight the need to study women’s representation on corporate boards.
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Feng, Nancy Chun, Xiaoting Hao, and Daniel Neely. "Board Chair–CEO Relationship, Board Chair Characteristics, and Nonprofit Executive Compensation." Journal of Public and Nonprofit Affairs 8, no. 1 (February 14, 2022): 78–95. http://dx.doi.org/10.20899/jpna.8.1.78-95.
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We examine the associations between board chair–CEO relationship, board chair characteristics, and top executive compensation in U.S. nonprofit organizations. Using a sample of 2,153 organization-year observations in our empirical tests, we find a significant positive association between board chair–CEO relationship and top executive compensation. We find that board chair characteristics such as tenure and gender are not significantly associated with top executive compensation. The supplementary analyses suggest that board chair–CEO relationships are positively associated with executive compensation but for only organizations with larger revenues, a bigger board, and a lower change in percentage of program expenses. The findings should be helpful in enhancing the understanding of influencing factors on nonprofit executive compensation.
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Lafuente, Esteban, and Miguel Angel García-Cestona. "Managerial turnover and performance in outside boards: Ownership makes the difference." Tec Empresarial 13, no. 3 (November 4, 2019): 2–27. http://dx.doi.org/10.18845/te.v13i3.4471.
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We examine the relationship between CEO, board and Chairman turnovers and future performance in banks with fully outside boards. Using a rich dataset on executive turnovers from Costa Rica, we find that ownership moderates the effect that control mechanisms have on performance. Our results indicate that executive turnovers followed by the appointment of outside executives (CEO and Chairman) have a positive impact on performance. On the contrary, large board replacements create organisational costs and these negatively affect performance. These results mainly hold for shareholder-oriented banks where managers and owners are more likely to be aligned. Finally, these results underline the importance of examining the effectiveness of governance mechanisms in emerging economies. More detailed information about ownership, legal framework and executive replacements can make a difference when it comes to evaluate the effectiveness of governance mechanisms.
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Petra, Steven T., and Nina T. Dorata. "Corporate governance and chief executive officer compensation." Corporate Governance: The international journal of business in society 8, no. 2 (April 11, 2008): 141–52. http://dx.doi.org/10.1108/14720700810863779.
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PurposeThis paper aims to examine whether there is an association between the level of performance‐based incentives offered to CEOs and the composition of firms' boards of directors and the compensation committee.Design/methodology/approachUnivariate tests are used to test the relation between the level of performance‐based incentives and corporate governance structures. A logistic regression analysis is used to predict the probability of CEOs receiving low performance‐based incentives when various characteristics of firms' boards of directors and compensation committees exist.FindingsThe authors find the presence of CEO duality reduces the likelihood of lower levels of performance‐based incentives offered to CEOs. Additionally, the authors find CEOs are more likely to receive lower levels of performance‐based incentives when the majority of the compensation committee members serve on less than three other boards, and when the size of the board is less than or equal to nine members.Research limitations/implicationsThis study is limited by the fact that the sample may not be representative of the general population of companies in the US.Practical implicationsShareholders who desire to keep CEO compensation levels low may consider supporting the separation of the positions of CEO and Chairperson of the Board, as well as supporting limiting the number of other boards directors may serve, and reducing or keeping the size of the board to a maximum of nine members.Originality/valueThe authors have documented an association between board structure and CEO compensation. It appears that company boards are able to monitor and control the compensation level offered to CEOs.
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Stone, Debra. "Type Of Board And Sustainability Reporting." Journal of Applied Business Research (JABR) 36, no. 5 (September 1, 2020): 229–40. http://dx.doi.org/10.19030/jabr.v36i5.10361.
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The research examined the relationship between BODT (board of director type) and CSR (corporate sustainability reporting), annual report disclosure and performance by using a sampling of companies listed on the S&P 500 for 2015. The data came from annual reports filed with the U.S. Securities and Exchange Commission and the Global Reporting Initiative. The study considered the relationship between BODT with emphasis on CEO (Chief Executive officer)-only and non-CEO-only boards and corporate sustainability reporting. Past research has found the CEO-only board relates to lower corporate performance and has seen significant use since the advent of the Sarbanes-Oxley Law that required boards that are more independent. The CEO-only board is an elaboration of an independent board or directors, whose only management member of the board is the CEO. The study used CEO-duality, another powerful influencer of boards, as a theoretical proxy for the CEO-only board. Regulators and investors are demanding higher level CSR reporting and information; therefore, the findings are of interest to both companies considering board of director type and regulators and investors. The quantitative categorical research study found a significant relationship between CEO-only boards and higher levels of disclosure and reporting. No significant relationship between CEO-only board and greater ROA was found. A possible reason for the differences in outcomes between the past research regarding independent boards that did not consider the CEO-only member and CSR reporting and the research presented in this study was the role of the lead independent director as a member of the CEO-only board not considered in this study.
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Nulla, Yusuf Mohammed. "Board influence and CEO power to executive compensation system in American SMEs." Corporate Board role duties and composition 11, no. 2 (2015): 132–45. http://dx.doi.org/10.22495/cbv11i2art11.
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This study investigated the board influence and CEO power towards determining the CEO compensation system in the American SMEs from 2005 to 2010. The quantitative research method was selected for this research study. The forty small to medium-sized companies were selected through a stratified sampling method. The research question for this research study was: what relationship is there between the board influence, CEO power, and CEO cash compensation, in the American SMEs. The results found that, there was a relationship between the board influence, CEO power, and CEO salary. However, the results also found that there was no relationship between the board influence, CEO power, and bonus. The correlations between the board influence, CEO power, CEO salary were characterized as weak, indication of the complexity of the executive compensation factors and external and internal environments surrounding the American SMEs.
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Hao, Qian, Nan Hu, Ling Liu, and Lee J. Yao. "Board interlock networks and the use of relative performance evaluation." International Journal of Accounting & Information Management 22, no. 3 (July 29, 2014): 237–51. http://dx.doi.org/10.1108/ijaim-06-2013-0039.
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Purpose – The purpose of this paper is to explore how networks of boards of directors affect relative performance evaluation (RPE) in chief executive officer (CEO) compensation. Design/methodology/approach – In this study, the authors propose that an interlocking network is an important inter-corporate setting, which has a bearing on whether boards decide to use RPE in CEO compensation. They adopt four typical graph measures to depict the centrality/position of each board in the interlock network: degree, betweenness, eigenvector and closeness, and study their impacts on RPE use. Findings – The authors find that firms that have more connected board members and whose board members are connected to better connected firms are more likely to reward their CEOs contingent on their peers’ performance, indicating that information transmission along the board interlock network facilitates the adoption of RPE. This result is robust to alternative measures for board interlock networks and various types of CEO compensation. It highlights the role of interlocking directorates in disseminating information and practice of RPE use along board network. Originality/value – The authors use social network analysis to measure the relationships and flows between the connected nodes and study the impact on executive compensation design.
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Ben Ali, Chiraz, and Frédéric Teulon. "CEO Monitoring and Board Effectiveness: Resolving the CEO Compensation Issue." Management international 21, no. 2 (October 16, 2018): 123–34. http://dx.doi.org/10.7202/1052692ar.
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This study examines the impact of board governance mechanisms on the pay of Chief Executive Officers (CEOs) using a sample of major French listed companies for the 2009–2011 period. The results show that CEO pay is negatively associated with the presence of a family CEO and positively associated with board size, busy directors, board meetings, and compensation committee independence. We provide further evidence that CEO compensation increases with firm size, and both present and past performance. Our study casts doubt on the effectiveness of formal board attributes in constraining CEO compensation.
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White, Reilly. "Executive pensions, compensation leverage, and firm risk." International Journal of Managerial Finance 14, no. 3 (June 4, 2018): 342–61. http://dx.doi.org/10.1108/ijmf-08-2017-0172.
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Purpose The purpose of this paper is to investigate how the structure of both CEO and non-CEO executive compensation affects the overall risk of a firm. The author focuses on the interplay between CEO and non-CEO executive compensation structure. Design/methodology/approach The author uses a hand-collected pension-database that employs both OLS and two-stage least squares regressions to determine the effects of inside debt on default risk using the distance-to-default framework. The database consists of 8,965 executive-year data points from 272 firms. Findings This paper accomplishes three major objectives: first, the author presents a significant extension of Sundaram and Yermack (2007) by including non-CEO executives; the author demonstrates how the differences in inside debt between CEO and non-CEO executives are directly related to firm risk; and that funding these pensions via a Rabbi Trust eliminates most of the risk-shifting effects. Firms with the lowest compensation leverage gap between CEO and non-CEO executives were most likely to observe the agency costs associated with high executive leverage. When compensation leverage structures were substantially different, or the pension was pre-funded, these effects are neutralized. Originality/value To the best of the author’s knowledge, the first paper addresses the effects of Rabbi Trusts on risk-shifting behavior between both CEOs and non-CEO executives. Further, the author extends Sundaram and Yermack (2007) using a hand-collected database six times larger than the original paper. By focusing on the “leverage gap” between CEOs and non-CEO executives, the author presents unique evidence that underlines the risk dynamics between CEOs and their boards.
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Nawaz, Tasawar. "How Much Does the Board Composition Matter? The Impact of Board Gender Diversity on CEO Compensation." Sustainability 14, no. 18 (September 19, 2022): 11719. http://dx.doi.org/10.3390/su141811719.
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The notion that female directors are better disposed to protect shareholders’ interests has brought boardroom gender diversity into the limelight. Echoing these emerging trends, this paper analyzes the relationship between board gender diversity, i.e., proportion of female directors on the corporate board, and Chief Executive Officer’s (CEO) compensation. Consistent with conjecture, the analysis suggests that large and diversified corporate boards are the main determinants of CEO compensation. Furthermore, longer-tenured CEOs who also serve as board chairperson receive higher total compensation and bonuses than their counterparts do. Into the bargain are corporate performance proxied by return of assets (ROA) and firm attributes, i.e., firm size and institutional ownership, which have divergent but direct implications for CEO compensation.
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Tuwey, Joel, and Vincent Ngeno. "Board Leadership, Chief Executive Officer Optimism and Firm Innovation." SEISENSE Journal of Management 2, no. 6 (October 3, 2019): 1–16. http://dx.doi.org/10.33215/sjom.v2i6.221.
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Purpose - Following the resource dependence and optimism theory, the study explored whether Chief Executive Officer (CEO) optimism moderates the link between board leadership and firm innovation in the financial sector.
Design/Methodology - 130 financial institutions in Kenya were surveyed using cross-sectional and explanatory designs. Hypothesis testing utilized both moderated hierarchical regression models and mod-graphs.
Findings - The results revealed that the board member’s openness and independence positively influence firm innovation. The moderated hierarchical regression results and figures in the mod-graphs reveal that CEO optimism enhances the association between the board member’s openness, independence, and firm innovation.
Practical Implications - The results suggested that for financial institutions to be innovative, board members should be open to each other in terms of the private ideas as well as being independent about decisions made to spur the growth of the firms. Additionally, such boards should appoint CEOs who are optimistic about being innovative.
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Suherman, Suherman, Berto Usman, Titis Fatarina Mahfirah, and Renhard Vesta. "Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country." Corporate Governance: The International Journal of Business in Society 21, no. 5 (April 11, 2021): 939–60. http://dx.doi.org/10.1108/cg-07-2020-0290.
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Purpose This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia). Design/methodology/approach The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors. Findings The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases. Research limitations/implications Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level. Originality/value This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).
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Ning, Yixi. "What can the departing chief executive compensation structure tell us?" Corporate Ownership and Control 11, no. 1 (2013): 307–15. http://dx.doi.org/10.22495/cocv11i1c3art1.
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This paper examines the amount and structure of the pay package for the departing CEO in a company around CEO succession. I find that the characteristics of the departing CEO compensation can provide valuable information regarding the incoming changes in corporate governance around the succession. Specifically, when a departing CEO is entrenched with a “better” compensation package characterized with a greater amount of pay in cash and in total at a lower risk, the CEO, after his retirement, is more likely to remain on the board as a director or become the chairman of the board, persuade the board to pick an insider rather than an outsider to be his successor, and to promote the company’s current president and/or chief operating officer to be the incoming CEO. These findings are consistent with the management entrenchment theory that when a CEO is entrenched with a greater discretionary power and better personal benefits, he is more likely to use his managerial power to continue his influence on the company even after he retires from the CEO position.
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Stein, Guido, Manuel Gallego, and Marta Cuadrado. "CEO succession and proprietary directors: evidence from Spanish listed firms." Corporate Ownership and Control 11, no. 1 (2013): 140–46. http://dx.doi.org/10.22495/cocv11i1conf2p5.
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This study advances research on CEO succession and board monitoring of senior executives by examining how proprietary directors can affect the probability of CEO dismissal. Drawing on our newly developed database covering all CEO successions occurring in all Spanish listed firms during the period 2007–2010, we propose that proprietary directors may increase the board’s monitoring efforts over the chief executive, forcing him to resign in situations of poor performance. Hypotheses are tested longitudinally, using CEO succession data taken from 111 publicly-traded firms in the Spanish ‘mercado continuo’ over a four-year period
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Quigley, Timothy J., Adam J. Wowak, and Craig Crossland. "Board Predictive Accuracy in Executive Selection Decisions: How Do Initial Board Perceptions of CEO Quality Correspond with Subsequent CEO Career Performance?" Organization Science 31, no. 3 (May 2020): 720–41. http://dx.doi.org/10.1287/orsc.2019.1326.
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Research examining board efficacy often focuses on oversight and monitoring, particularly as evidenced by the sensitivity of chief executive officer (CEO) compensation to prior firm performance. In this study, we adopt an alternative perspective on CEO compensation—specifically over/underpayment, or the extent to which a CEO’s initial compensation is above or below prevailing market norms—that allows us to assess a board’s efficacy via the accuracy of its initial CEO selection and compensation decisions. We build on and extend human capital theory to argue that boards make initial CEO compensation decisions based a range of manifestations of CEO human capital (that are both observable and unobservable to outsiders) and that initial over/underpayment represents an implicit assessment of underlying CEO quality. Using a sample of 766 CEOs, we relate initial over/underpayment to subsequent CEO career performance. Our results show that this core relationship is positively significant and economically meaningful. Thus, U.S. public company boards, as a group, do tend to be making broadly accurate initial predictions regarding the underlying capabilities of new CEO hires. This relationship is amplified in situations where board assessments of CEO human capital are more unequivocal (greater current versus prospective compensation) and when CEO human capital can be expressed most comprehensively (high managerial discretion). In supplemental analyses we show that these relationships fundamentally changed following the implementation of the Sarbanes–Oxley Act, suggesting that boards may be performing this important aspect of their governance role more effectively in recent times. We also find that our results are not symmetric—rather, they are strongest in situations where initial compensation is midrange or lower; high levels of initial overpayment are not associated with commensurate levels of career performance. Finally, we consider and account for a range of alternative explanations for our central finding.
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Owusu, Andrews. "Revisiting the relationship between board practices and firm performance." Corporate Board role duties and composition 17, no. 1 (2021): 60–68. http://dx.doi.org/10.22495/cbv17i1art6.
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This paper examines whether and how firm performance is influenced by board practices in Ghana. The analysis shows that chief executive officer (CEO) duality has a negative impact on firm performance, evidence that supports agency theory’s position. Further analysis shows that the smaller Ghanaian board size appears to be optimal because it has a positive impact on firm performance. However, the larger non-executive director representation on the board has no impact on firm performance. Overall, these results suggest that the Ghanaian firms should be encouraged to separate the role of CEO and the board chair positions, have a board size of between eight and nine, and make good use of non-executive directors’ time in the board decision process if they are to achieve better performance.
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Nguyen, Thi Lien Huong, Nhat Minh Tran, and Manh Chien Vu. "THE INFLUENCE OF BOARD CHARACTERISTICS AND STATE HOLDING ON CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE, EVIDENCE FROM VIETNAMESE LISTED FIRMS." Business: Theory and Practice 22, no. 1 (June 4, 2021): 190–201. http://dx.doi.org/10.3846/btp.2021.13490.
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Analysing the nexus between board diversity, CEO power, state holding, and corporate social responsibility disclosure in an emerging country: Vietnam, where some listed firms are held significantly by the State, is the fundamental objective of this study. In order to achieve this goal, we employed regression analysis using panel data. While board diversity consists of board gender diversification and board independence and CEO (executive) power, consisting of executive duality, executive holding (ownership), and deputy CEO, and state ownership are explanatory variables, and CSR disclosure is a dependent variable. The sample contains of 166 Vietnamese listed firms at the Hanoi Stock Exchange (HNX) for 2014−2016. After performing regression analysis, the result revealed that the proportion of female directors, deputy CEO, and state holding had a significant correlation with CSR publication. In contrast, the proportion of independent directors, CEO duality, and CEO ownership was found to be insignificant. Our research adds to the research on firm governance and CSR in several approaches. First, the paper adds to the study on the advancement of research toward corporate social responsibility and firm governance and CEO features impress on it. Second, our research expands CSR literature in developing countries, which has not been treated in detail. Fourth, this research advances and adds literature to some theories, including agency theory and resource-based view theory.
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Grove, Hugh, and Maclyn Clouse. "Board compensation committees: CEO pay and market cap performance with implications for investors." Corporate Ownership and Control 14, no. 3 (2017): 180–87. http://dx.doi.org/10.22495/cocv14i3c1art3.
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Board of Directors’ compensation committees currently have no pay provisions requiring CEO or top executives’ compensation claw-backs for market capitalization destruction which could have huge impacts on such top executive pay. For example, CEO pay was correlated with market capitalization performance for 24 companies in the metal mining, primary metal, and coal mining industries. Simple correlation tests of 2013 total CEO pay with market capitalization destruction over the five-year period, January 2011 through December 2015, yielded a 74% weighted average strong correlation. The total annual pay for these 24 CEOs was $198 million or an estimated $1 billion over the five-year period from 2011-2015. During this same five-year period, the market capitalization for these 24 companies decreased 73% or $180 billion. During this same five-year time period, the S&P 500 Index increased 63%. Some corporate governance researchers (Kostyuk, 2014 and Hilb, 2008) have advocated: “Pay for Performance, not Presence” which could include such correlations with claw-back provisions as part of executive compensation packages from Board of Directors’ compensation committees.
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Bolfek, Berislav, Perina Torbarina, and Lucija Surać. "Struktura i faktori koji utječu na utvrđivanje kompenzacija izvršnih menadžera." Oeconomica Jadertina 6, no. 2 (November 12, 2017): 52. http://dx.doi.org/10.15291/oec.1343.
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Executive managers represent a small precentage of one companies workers but they are the most important group of employees. The ideal compensation management policy ensures that the best talent will remain with the organization while attracting new talent and minimizing turnover. Executive compensation normally combines base salary, short-term and long-term incentives, benefits and bonuses. The purpose of this paper is to explore and analyse data about stucture and factors that affect executive compensation determination of top five global brands. The collected data on the hight of executive compensations refer to the period from 2010 to 2015. Selected executives are leaders of the companies that are ranked as the top five global brands on Interbrands 2015 list. CEO pay in the U.S. has grown exponentially since the 1970s. The CEO-to-worker pay ratio trend indicates that the ratio keeps rising over the years, with some CEOs making more than 400 times the median salary of their employees. Some analyst recommend that every company's compensation system should include implementing certain regulatory actions, using different metrics for determining CEO compensation, making board member-CEO relationships transparent to all company stakeholders.
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Maitlis, Sally. "Taking it from the Top: How CEOs Influence (and Fail to Influence) their Boards." Organization Studies 25, no. 8 (October 2004): 1275–311. http://dx.doi.org/10.1177/0170840604046318.
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This article examines how chief executive officers (CEOs) influence their boards in symphony orchestra governance. Traditional governance research has studied the impact of structural factors on the CEO-board relationship, but less attention has been paid to the ways in which influence in these relationships is enacted, and to the role of the CEO in particular. Drawing on two intensive, longitudinal case studies, this article investigates the behavioural dynamics of the CEO-board relationship, identifying four key processes that underpin successful CEO influence: exploiting key relationships, managing impressions, managing information, and protecting formal authority. It concludes with an examination of the interrelated and embedded nature of these processes, and considers the implications for theory and research in organizational governance.
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Cao, Xian, Junyon Im, and Imran Syed. "A Meta-Analysis of the Relationship Between Chief Executive Officer Tenure and Firm Financial Performance: The Moderating Effects of Chief Executive Officer Pay and Board Monitoring." Group & Organization Management 46, no. 3 (February 8, 2021): 530–63. http://dx.doi.org/10.1177/1059601121989575.
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Prior empirical research investigating the relationship between chief executive officer (CEO) tenure and firms’ financial performance has shown inconclusive results. Based on arguments of agency and behavioral agency theories, we suggest that this relationship is nuanced and may vary depending on CEO pay and board monitoring. In response to these arguments, we meta-analytically test 385 studies ( n = 1,029,602). We find that CEO tenure is positively related to firms’ financial performance. This positive relationship is enhanced when CEOs receive higher cash compensation or hold more stock ownership. On the other hand, the above positive relationship becomes weaker when CEOs receive higher long-term incentives or when the firm has more independent board directors. These findings suggest that CEO pay and board monitoring, or agency mechanisms in general, can offer new research avenues to help explore boundary conditions of the CEO tenure and firms’ financial performance relationship.
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Pucheta-Martínez, María Consuelo, and Carlos Chiva-Ortells. "Institutional shareholding as a corporate governance mechanism that drives Chief Executive Officer pay." BRQ Business Research Quarterly 23, no. 3 (July 2020): 217–33. http://dx.doi.org/10.1177/2340944420941462.
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We explore the effect of institutional directors on Chief Executive Officer (CEO) pay (total, fixed, and variable compensation). We delve particularly into the impact of pressure-sensitive and pressure-resistant institutional directors, who, respectively, represent institutional investors who maintain and investors who do not maintain a business relationship with the firm whose board they serve on. Focusing on CEO total pay, the findings show that institutional and pressure-resistant directors on boards behave similarly, affecting CEO total pay in a nonlinear way: as the presence of institutional and pressure-resistant directors on boards increases, the monitoring hypothesis prevails, and subsequently, better corporate governance decreases CEO total pay. However, when their presence on boards exceeds a critical point, the entrenchment hypothesis holds, thereby leading to an increase in CEO total pay. Contrary to our predictions, pressure-sensitive directors do not affect CEO total pay. Regarding the CEO’s compensation structure (fixed and variable), the results suggest that institutional and pressure-resistant directors increase fixed compensation and reduce variable pay, while pressure-sensitive directors affect neither fixed nor variable compensation. This evidence supports the view that institutional directors should be considered as a heterogeneous collective. JEL CLASSIFICATION: G3, G34, M12
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Profumo, Giorgia. "Editorial Note." Corporate Board role duties and composition 14, no. 3 (2018): 4–5. http://dx.doi.org/10.22495/cbv14i3_editorial.
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The third issue of the journal “Corporate Board: Role, Duties and Composition” in 2018 is devoted to the issues of accounting standards, financial reporting, profit and loss contracts, IFRS, inside debt, CEO pay slice, executive compensation, incentives, organisational demography, board size, board leadership structure, CEO duality, sustainable development, environmental accounting etc.
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Ngwenya, Sam. "CEO compensation, corporate governance, and performance of listed platinum mines in South Africa." Corporate Ownership and Control 13, no. 2 (2016): 408–16. http://dx.doi.org/10.22495/cocv13i2clp8.
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Executive compensation has been studied extensively in the past three decades, yet the relationship between company performance and executive compensation continues to be a debated topic judging from the number of articles in academic literature. The main objective of this study was to determine the relationship between CEO compensation, corporate governance and financial performance of listed platinum mines in South Africa. The results of the study indicated no statistics significant relationship between CEO compensation and the financial performance variables ROE and ROA. The results also indicated a positive relationship between some corporate governance variables such as board size and proportion number of independent non-executive directors, but found no statistic significant relationship between CEO compensation and proportion number of female board members.
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Tarus, Daniel Kipkirong, and Ezekiel Ayabei. "Board composition and capital structure: evidence from Kenya." Management Research Review 39, no. 9 (September 19, 2016): 1056–79. http://dx.doi.org/10.1108/mrr-01-2015-0019.
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Purpose The purpose of this study is to examine the effect of board composition on capital structure of a firm. Design/methodology/approach The paper uses data from firms listed in Nairobi Securities Exchange covering the period 2004-2012. Fixed effect regression model was estimated to test the effect of board composition on capital structure and how chief executive officer (CEO) tenure moderates the relationship. Findings The paper finds that board composition has important implications on capital structure decisions. Specifically, director independence is positively related to leverage, whereas CEO duality and tenure have negative and significant effect on leverage. In addition, the interaction effect of CEO tenure indicates that when CEOs have long tenure, the power of independent directors to influence capital structure decisions diminishes. Further, the study found that under long CEO tenure, long-tenure boards use less leverage in their capital structure. As expected, dual CEO with long tenure uses less leverage. Originality/value The study uses data from an emerging market, contrary to previous studies using data from developed markets, to test the relationship between board composition and leverage. Second, the paper tests the moderating effect of CEO tenure on board composition – leverage relationship based on the idea that entrenched CEO may influence the decision-making ability of directors, particularly capital structure decisions.
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Belhaj, Salma, and Cesario Mateus. "Corporate governance impact on bank performance evidence from Europe." Corporate Ownership and Control 13, no. 4 (2016): 583–97. http://dx.doi.org/10.22495/cocv13i4c4p8.
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This paper investigates the impact of corporate governance on European bank performance during the period 2002-2011. Using a sample of 73 banks from 11 European countries, we examine the relationship between corporate governance measures more specifically the board size and composition, the gender diversity and the CEO duality on the European bank performance. During the period 2002-2011, our results show that the board size and the gender diversity have a positive and significant impact on bank performance. Large board of directors with more female members led to better bank performance, whereas, the board composition and the CEO duality have no significant effect in explaining the bank performance for the European countries. During the global financial crisis, our findings show that the board size and the board composition are negatively and significantly correlated to the bank performance. Smaller boards of directors with less number of independent (non-executive) directors have outperformed the ones with larger boards and more independent directors during the crisis. However, the gender diversity and the CEO duality have no significant impact on the European bank performance.
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Mobbs, Shawn. "CEOs Under Fire: The Effects of Competition from Inside Directors on Forced CEO Turnover and CEO Compensation." Journal of Financial and Quantitative Analysis 48, no. 3 (June 2013): 669–98. http://dx.doi.org/10.1017/s0022109013000318.
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AbstractThis study examines board monitoring when a credible chief executive officer (CEO) replacement is on the board. Inside directors whose talents are in greater demand externally, as reflected by their holding outside directorships, are more likely to become CEOs, and their presence is associated with greater forced CEO turnover sensitivity to accounting performance and CEO compensation sensitivity to stock performance. These results reveal that certain insiders strengthen board monitoring by serving as a readily available CEO replacement and contradict the presumption that all insiders are under CEO control. Furthermore, the results persist when accounting for the endogenous firm selection of talented inside directors.
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Pukthuanthong, Kuntara, Eli Talmor, and James S. Wallace. "Corporate governance and theories of executive pay." Corporate Ownership and Control 1, no. 2 (2003): 94–105. http://dx.doi.org/10.22495/cocv1i2p8.
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This study performs an in-depth look at the corporate governance, voting and ownership structure of the companies selected using a relatively homogenous data of the U.S. financial sector. Variables that proxy for managerial strategic discretion and task complexity are found to best explain CEO compensation. Corporate governance, including board characteristics and ownership structure, is the second leading determinant of pay variation, while firm performance and CEO specific characteristics seem to play the least role. In accord with studies on managerial stock ownership and Tobin’s Q, the pay-for-performance relation appears to be curvilinear in CEO stock ownership
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Schwering, Anja, Friedrich Sommer, Florian Uepping, and Sandra Winkelmann. "The social-psychological perspective on executive compensation: evidence from a two-tier board system." Journal of Business Economics 92, no. 2 (October 22, 2021): 309–45. http://dx.doi.org/10.1007/s11573-021-01066-5.
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AbstractThis paper investigates whether and how social-psychological mechanisms, namely reciprocity, demographic similarity, and similar experiences, affect CEO compensation packages with respect to the levels of total, fixed, and short- and mid-term compensation and the variable proportion of the compensation package. We use evidence from Germany as it is considered a prototype of a two-tier board system. Given the primary roles of both the CEO and the chair of the supervisory board, we especially highlight social-psychological mechanisms in the process leading to the final compensation package. Using a hand-collected sample of non-financial constituents of the German HDAX, we find that reciprocity can lead to a compensation package that is more favorable for the CEO. Results on similarity are ambivalent such that the effects of similarity on CEO compensation—both positive and negative—may depend on the dimension of similarity. Finally, the chair’s CEO experience, both inside and outside the focal company, also plays an essential role in shaping CEO compensation. More specifically, CEO experience in general is associated with more favorable compensation. However, having a chair that has been CEO at the focal company correlates with less favorable compensation packages except for when the CEO has also been recruited internally.
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Oladottir, Asta Dis, and Thora H. Christiansen. "Gender quota legislation has no spillover effect on hiring of female CEOs." International Conference on Gender Research 5, no. 1 (April 13, 2022): pp80–87. http://dx.doi.org/10.34190/icgr.5.1.85.
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Iceland is a global leader in gender equality. Nevertheless, women face apparent exclusion from senior executive positions, and men hold 19 out of 20 CEO positions at listed companies. This study sheds light on the hiring process for CEOs of listed companies and on why the increased number of female board members has not led to an increased number of female CEOs. The research question is as follows: How do women on boards of listed companies experience the CEO hiring process with regard to equality of opportunity for male and female candidates? The study reports findings from interviews with 22 women who collectively sit on the boards of all of the listed companies in Iceland. Findings reveal a deep dissatisfaction with the prevailing CEO hiring practices, which they experience as a fast-paced and closed process, heavily reliant on board members’ networks and headhunters’ lists. The interviewees find that the outcomes exclude women, and they are conflicted about their own participation in the process. They voice the need for inclusion and call for disruptive tactics, more courage and gender quotas at the executive level. The main contribution of this research is that for the first time, female board members of all listed companies in one country have been interviewed to shed light on their experiences of the hiring process for senior management positions.
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Afrifa, Godfred Adjappong, and Venancio Tauringana. "Corporate governance and performance of UK listed small and medium enterprises." Corporate Governance 15, no. 5 (October 5, 2015): 719–33. http://dx.doi.org/10.1108/cg-03-2015-0029.
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Purpose – This paper aims to report the results of an investigation into the effect of corporate governance factors on the performance of listed small and medium-sized enterprises (SMEs), and examines whether this effect differs between the two sizes of business. Design/methodology/approach – The paper uses unbalanced panel data regression analysis on a sample of 234 SMEs listed on the Alternative Investment Market, for a 10-year period (2004-2013). Findings – The panel data analysis results show that for all SMEs, corporate governance factors – board size, chief executive officer (CEO) age and tenure and directors’ remuneration – are significantly associated with performance of SMEs. The results also suggest that while board size is associated with the performance of both small and medium enterprises, CEO age is significant only for medium firms and directors’ remuneration only for small ones, while CEO tenure and proportion of non-executive directors are not significant for either. Practical implications – Overall, the results imply that corporate governance factors affect the performance of listed SMEs. However, this effect differs significantly between small and medium enterprises. The findings have important implications for policymakers who prescribe corporate governance mechanisms for SMEs. Originality/value – The paper adds to existing literature on corporate governance of SMEs by establishing a relationship between firm performance and board size, CEO age, CEO tenure, directors’ remuneration and proportion of non-executive directors.
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Walther, Axel, Andrea Calabrò, and Michèle Morner. "Got a plan in the pipeline? Nominating committee’s information processing in executive successions." Management Decision 55, no. 10 (November 20, 2017): 2200–2217. http://dx.doi.org/10.1108/md-07-2016-0479.
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Purpose The purpose of this paper is to examine how information-processing mechanisms between nominating committees (NCs), incumbent executives, board chairs, and shareholders affect the comprehensiveness of executive succession processes. Design/methodology/approach The authors employ an explanatory multiple-case study that comprises eight CEO and CFO succession cases in large German publicly traded firms. Findings The findings reveal that comprehensiveness is determined by four key information-processing mechanisms: the effectiveness of NC’s information sharing, absorbing disagreement, and integrating heterogeneous opinions; board chair leadership (i.e. an apprentice board leadership structure in association with the board chair’s openness to ideas); the breadth and depth of information sharing between executives and NCs; and the extent and timing to which major shareholders influence succession processes. Research limitations/implications The authors summarize the findings in a conceptual framework and develop a set of propositions to guide future research on the topic. Such studies may want to test the suggestions in a quantitative way, preferably in a multinational context. Originality/value The authors’ emerging conceptual framework contributes a set of information-processing variables by which NCs engage in comprehensive executive successions with incumbent executives, board chairs, and major shareholders and offers a multiechelon approach to study executive successions.
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Bouteska, Ahmed, and Salma Mefteh-Wali. "The determinants of CEO compensation: new insights from United States." Journal of Applied Accounting Research 22, no. 4 (April 5, 2021): 663–86. http://dx.doi.org/10.1108/jaar-08-2020-0176.
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PurposeThe 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.Design/methodology/approachThe 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.FindingsThe 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.Research limitations/implicationsAt 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.Practical implicationsThe 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…).Originality/valueThis 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.
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Ab Razak, Nazrul Hisyam, and Salmi Huwaina Palahuddin. "Corporate governance and earning management: Evidence from 200 Malaysian listed firms from the period of 2007 to 2011." Corporate Board role duties and composition 10, no. 1 (2014): 6–17. http://dx.doi.org/10.22495/cbv10i1art1.
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This study examines the effectiveness of some corporate governance variables to monitor management behavior with the respect to their incentives to manage earnings. A set of 200 Malaysian listed firms for the year 2007 to 2011 in Bursa Malaysia have been investigated to analyze the relationship between corporate governance and earnings management. The corporate governance variables examined are CEO duality (when the chairman and the CEO is the same person), the proportion of independent non-executive directors and board size. We find discretionary accruals as a proxy for earnings management is negatively related to the board size and ROA, but positively related to the existence of CEO-Chairman duality, size of the firms, and operating cash flow. However, the results do not show a significant association between the proportion of independent non-executive directors on the board and earnings management.
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Tran, Quan, Dimitrios N. Koufopoulos, and Bernadette Warner. "The effectiveness of boards of directors in two-tier board system: Evidence from Vietnamese-listed enterprises." Journal of Eastern European and Central Asian Research (JEECAR) 1, no. 1 (March 9, 2014): 12. http://dx.doi.org/10.15549/jeecar.v1i1.51.
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This paper presents several theories to achieve a better understanding of corporate governance structures and their operations in a two-tier-board corporate governance structure. The author also analyses transitional economies using the case of Vietnam. The author investigates the influence of independent directors upon the probability of CEO turnover as well as the sensitivity of the link between performance and turnover. The findings show that non-executive directors are not always independent. At the same time, independent directors have a vital role to play in making decisions concerning CEO dismissal. These directors also reduce the effects of CEO ownership and CEO duality upon the probability of CEO turnover. In summation, the research found that performance and CEO age constitute key factors in CEO turnover, regardless of the corporation or board size.
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Spahaj, Emira. "Emperical Data on the Correlation between CEO Duality and the Performance of a Corporate." European Journal of Interdisciplinary Studies 1, no. 2 (August 30, 2015): 55. http://dx.doi.org/10.26417/ejis.v1i2.p55-61.
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An independent CEO’s discipline is greatly influenced by the way a corporate is managed, hence improving the firm’s value in those corporate that are developing and the ones that have already developed. Additionally, the shareholders’ interest can as well be safeguarded by the CEO and the board through creation of more safeguard guidelines. Macro-economic and micro-economic level corporate experiences significant implication from the governance, whereby corporate governance that is poor may lead to corporations’ failure, for instance Worldcom and Enron experienced this type of failure. This paper scrutinizes the connection between dual and separated Chairs-CEOs structures and implications in the performance of corporate. The interest of CEO Duality emanates from the idea that CEO duality would make a difference to the performance of a firm and corporate governance . There exists controversy in the manner which the company is affected by the CEO duality. The most commonly used instruments in the implementation of corporate governance include independent directors, board size, board directors, chief executive officer, political administration, judiciary, regulatory authority and the government itself. Corporate governance also gives a specific structure via which objectives of the firm are set. Corporate governance also provides the means of accomplishing these objectives and also how to monitor the firm’s performance. Corporate success and board performance does not solely depend on the chief executive’s position or the position held by the chief. It does matter whether these two positions are held by one or two people. This Lack of adequate evidence in the scientific research in order to support the argument concerning separate or combined roles of a CEO, result in management dilemma. A theory supporting joint positions, is that integrating the positions of CEO and Chair minimizes the cost of transferring information which should take place if different persons hold the position of CEO and Chair. Since the transfer of information might be expensive, imperfect or untimely, having essential information reside in one joint CEO and Chair might enhance the individual’s ability to carry out the responsibilities of management. In the other side a theory that supporting of split CEO and Chair positions propose that the board also carry out its supervisory duty better when the Chair is a non-executive individual. The paper aims at introducing and giving a panoramic analysis of the relevant perceptions of management and corporate governance like the CEO Duality and the implications it has in the performance of corporate. Should a CEO take action simultaneously as the Corporate Board Chairman? Would the CEO Duality hamper or improve the performance of a corporate?
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Spahaj, Emira. "Emperical Data on the Correlation between CEO Duality and the Performance of a Corporate." European Journal of Interdisciplinary Studies 2, no. 1 (August 30, 2015): 55. http://dx.doi.org/10.26417/ejis.v2i1.p55-61.
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An independent CEO’s discipline is greatly influenced by the way a corporate is managed, hence improving the firm’s value in those corporate that are developing and the ones that have already developed. Additionally, the shareholders’ interest can as well be safeguarded by the CEO and the board through creation of more safeguard guidelines. Macro-economic and micro-economic level corporate experiences significant implication from the governance, whereby corporate governance that is poor may lead to corporations’ failure, for instance Worldcom and Enron experienced this type of failure. This paper scrutinizes the connection between dual and separated Chairs-CEOs structures and implications in the performance of corporate. The interest of CEO Duality emanates from the idea that CEO duality would make a difference to the performance of a firm and corporate governance . There exists controversy in the manner which the company is affected by the CEO duality. The most commonly used instruments in the implementation of corporate governance include independent directors, board size, board directors, chief executive officer, political administration, judiciary, regulatory authority and the government itself. Corporate governance also gives a specific structure via which objectives of the firm are set. Corporate governance also provides the means of accomplishing these objectives and also how to monitor the firm’s performance. Corporate success and board performance does not solely depend on the chief executive’s position or the position held by the chief. It does matter whether these two positions are held by one or two people. This Lack of adequate evidence in the scientific research in order to support the argument concerning separate or combined roles of a CEO, result in management dilemma. A theory supporting joint positions, is that integrating the positions of CEO and Chair minimizes the cost of transferring information which should take place if different persons hold the position of CEO and Chair. Since the transfer of information might be expensive, imperfect or untimely, having essential information reside in one joint CEO and Chair might enhance the individual’s ability to carry out the responsibilities of management. In the other side a theory that supporting of split CEO and Chair positions propose that the board also carry out its supervisory duty better when the Chair is a non-executive individual. The paper aims at introducing and giving a panoramic analysis of the relevant perceptions of management and corporate governance like the CEO Duality and the implications it has in the performance of corporate. Should a CEO take action simultaneously as the Corporate Board Chairman? Would the CEO Duality hamper or improve the performance of a corporate?
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Mushtaq, Mudassar, Sajida Parveen, and Muhammad Furqan Ashraf. "Impact of Corporate Governance on a Firms Financial Performance (The Case of Pakistan)." I IV, no. I (March 30, 2019): 11–21. http://dx.doi.org/10.31703/ger.2019(iv-i).03.
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Analyst attempts to best find the job of corporate governance (CG) on the evolvement/execution of the company just as on other budgetary choices. In this examination CG is estimated by utilizing five factors board size (S), executive gatherings, CEO duality, level of non-official directors (Dirs). also, the level of autonomous Dirs. ROA isnt influenced by the scale/size of the board and effect irrelevantly. Board size in the setting of Pakistan cant develop a reason to increment or diminish organization ROA. Non-official executives job doesnt validate the addition in the evolvement of the organization just as in ROA of organization. Organization evolvement and ROA are related adversely with the extent of executives who are not Dirs. The companys extension in size is enormous or little cat build the productivity of the organization in using the benefits for remittance, it generally relies upon the capacities of bosses as opposed to (S).
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Al-Mughrabi, Yahia M. "The Determinants of CEO Cash Compensation in Non-Financial Listed Firms: Evidence from Jordan." International Journal of Economics and Finance 14, no. 6 (May 22, 2022): 44. http://dx.doi.org/10.5539/ijef.v14n6p44.
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Compensation paid to top executive managers is one of the sensitive areas in modern corporate finance. The objective of this paper is to investigate the determinants of the Chief Executive Officer and/or the Chairman of the board of directors’ cash compensation. It examines mainly the linkage between ownership concentration, role duality, financial performance, among other variables, and executives’ cash compensation for a sample of 81 Jordanian listed firms during the period 2010-2013.
By applying fixed and random effects estimates, I find conclusive evidence that dual CEOs receive higher cash compensation, compared to those who do not hold the position of Chairman. In addition, CEOs in larger firms are more compensated than others in smaller ones. The results provided evidence that a firm’s leverage does not affect its CEO’s cash compensation, however, the firm’s industry identity plays some role in determining its executive pay, but not its Chairman of the board. The analysis fails to link CEO cash compensation to the firm’s financial performance and ownership structure, implying that neither compensation contracts nor concentrated ownership structures can alleviate the agency problem or reduce agency costs in Jordanian firms. These results do not diverge much when the dependent variable is the Chairman of the board of directors’ cash compensation.
Overall, Jordanian CEOs are unjustifiably over-compensated as they fail to prove their worth, in light of such lamentable performance of the Jordanian non-financial listed firms, which raises questions about executives’ compensations determining mechanism, and the process of hiring CEOs in the first place.
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Marashdeh, Zyad, Mohammad W. Alomari, Mahmoud Mohmad Aleqab, and Rateb Mohammad Alqatamin. "Board characteristics and firm performance: The case of Jordanian non-financial institutions." Journal of Governance and Regulation 10, no. 3 (2021): 150–59. http://dx.doi.org/10.22495/jgrv10i3art13.
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The study aims to examine the impact of board characteristics on firm performance of non-financial institutions in Jordan. The study employs the random effects regression model to analyze the panel data of 77 non-financial institutions of the industrial and services sector over the period 2008–2019. Firm performance is measured by return on assets ROA. While board characteristics were explained by board size, CEO duality, CEO tenure, non-executive directors (NEDs), and a number of board meetings. Firm age and firm size were added to our model as control variables. Our results reveal that board size, CEO tenure, non-executive directors (NEDs), firm age, and firm size have a positive significant impact on firm performance, whereas the CEO duality and a number of board meetings have a negative significant impact on firm performance. This paper will contribute to the ongoing debate on the relationship between the board characteristics and firm performance. Therefore, the current study extends previous literature by providing empirical evidence about the relationship between board characteristics and a firm performance. Particularly in developing countries, there is relatively a little researched area. Jordanian firms are needed to consider the significance of the board characteristics especially, for the non-financial institutions that can help them in designing the board strategies to enhance their performance. Therefore, Jordanian data will offer new empirical evidence in an emerging market, which will provide a better understanding of the relationship between board characteristics and firm performance.
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Egbunike, Chinedu Francis, and Augustine N. Odum. "Board leadership structure and earnings quality." Asian Journal of Accounting Research 3, no. 1 (August 6, 2018): 82–111. http://dx.doi.org/10.1108/ajar-05-2018-0002.
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Purpose One main concern and issue affecting earnings quality is the extent to which managers manipulate earnings to mislead stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers. This study builds on prior research and examines empirically the relationship between board leadership structure and earnings quality of manufacturing firms in Nigeria. The purpose of this paper is to specifically focus on four board structure characteristics: board size, composition, proportion of non-executive directors and CEO duality. Design/methodology/approach Data used for this investigation were collected from secondary sources, i.e. annual reports and accounts. The study used the Pooled OLS regression model to examine the effect of the board structure on earnings management for a sample of 45 non-financial listed Nigerian companies (conglomerates, consumer goods and industrial goods firms) for the years 2011 to 2016. Findings Based on the analysis, board size and board composition were positive and significant. However, proportion of non-executive directors was negative and significant; while, CEO duality was positive and statistically significant. It was consequently recommended that audit firms should review their audit business model and become more circumspect of their client, e.g. provide fraud assessment and checks for earnings quality. Boards should not just reflect size but rather the skills and expertise of individuals appointed to the board. Furtherance to this, the effectiveness of boards can be improved by committees and sub-committees allocation of duties. Originality/value Few studies have addressed this area in the country.
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Horstmeyer, Derek. "Beyond Independence: CEO Influence and the Internal Operations of the Board." Quarterly Journal of Finance 09, no. 02 (March 25, 2019): 1950006. http://dx.doi.org/10.1142/s201013921950006x.
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Using a detailed dataset on the meeting sub-structure of the board, this paper investigates the time trends and cross-sectional determinants of internal boardroom control. First, I document that the principal governance reform following Sarbanes–Oxley was the removal of the CEO as a participating member in board monitoring and investment decisions. Consistent with this being against the preferences of the average CEO, I find that CEO power is negatively related to monitoring work handled outside of the CEO’s presence and positively related to board-time spent in the executive committee. Together the results highlight internal operations as governance concerns of the modern board.
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Feng, Liu. "The Impact of Governance Mechanism of Financial Listed Companies on the Pay and the Pay-Performance Sensitivity of Executives." International Journal of Business and Management 13, no. 3 (February 25, 2018): 233. http://dx.doi.org/10.5539/ijbm.v13n3p233.
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The corporate governance mechanism is very important to solve the principal-agent problem effectively. Based on the particularity of the financial industry, this paper uses the panel data of 45 listed companies in China's financial industry from 2007 to 2015, the empirical results show that the degree of ownership concentration, the duality of CEO and chairman of the board and the independent directors proportion have a significant negative impact on executive pay, and the size of the board of supervisors has no marked impact on executive pay. The degree of ownership concentration has a significant positive impact on the pay-performance sensitivity, and the duality of CEO and chairman of the board, the independent directors proportion and the size of the board of supervisors have a significant negative impact on the pay-performance sensitivity. For the listed companies in the financial sector, they should pay attention to the executive pay disclosure system, the board of supervisors governance mechanism and the independent director system. We can use the degree of ownership concentration to improve the pay-performance sensitivity, and make corporate governance more effective.
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Zulfikar, Zulfikar, Nursiam Nursiam, Mujiyati Mujiyati, and Rosida Nur Syamsiyati. "CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power." Problems and Perspectives in Management 19, no. 4 (December 30, 2021): 530–43. http://dx.doi.org/10.21511/ppm.19(4).2021.43.
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The purpose of the study is to thoroughly outline how the hubris behavior of chief executive officers (CEO) is detrimental to Islamic banks’ (IBs) performance. Specifically, this study attempts to examine the role of the Sharia supervisory board (SSB), board vigilance, and CEO power in the relationship between CEO hubris behavior and decreased IBs’ performance. This study observes IBs’ performance during the period from 2014 to 2020 and develops eight models to test their determinants. Empirical testing of all models shows that CEO hubris has a detrimental impact on IBs’ performance. The moderating impact test shows the following results: firstly, the presence of SSB, which is represented by the reputation of its members, reduces the detrimental impact of hubris behavior by CEOs on IBs’ performance, while that impact, which is represented by member expertise, does not have a moderating effect. Second, the size and independence of the BOC both weaken the negative relationship between CEO hubris and IBs’ performance. Third, CEO power as represented by tenure and ownership has no moderating effect.
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Uppal, Nishant. "CEO narcissism, CEO duality, TMT agreeableness and firm performance." European Business Review 32, no. 4 (February 20, 2020): 573–90. http://dx.doi.org/10.1108/ebr-06-2019-0121.
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Purpose This study aims to investigate the relationship between Chief Executive Officer (CEO) narcissism and firm performance. Further, it examined the moderation effects of CEO duality and top management team (TMT) and board member agreeableness on the CEO narcissism–firm performance relationship. Design/methodology/approach The study is based on survey data from 373 CEOs in the automobile industry in India. The paper used mixed method research where CEO narcissism and TMT agreeableness has been measured using survey instruments, other data such as firm performance has been captured using secondary sources. Findings The study confirms that the relationship between CEO narcissism and firm performance is curvilinear, meaning that narcissism can positively impact firm performance to a point, but may become counter-productive or ineffective beyond that. Further, CEO duality and TMT and board member agreeableness significantly impact this relationship. Originality/value This paper fulfills an identified need to study how CEO behavior can affect variance in firm performance. The authors discuss theoretical and practical implications and offer suggestions for future research.
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Suganya, S. Jeyan, and L. Kengatharan. "Board Structure and Financial Performance of Listed Finance Companies in Sri Lanka." International Journal of Accounting and Financial Reporting 7, no. 2 (December 10, 2017): 292. http://dx.doi.org/10.5296/ijafr.v7i2.12192.
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This study investigated the relationship between board structure and financial performance of listed finance companies in Sri Lanka. Data were gathered from the financial statements of randomly selected 20 finance companies which are listed on CSE under Bank, Finance and Insurance Sector for the period of 2011-2015. Financial performance was measured by return on assets (ROA). Board size, female board members, CEO duality, and non-executive directors were considered as the parameters of board structure. Furthermore market capitalization was taken as the control variable. Pooled OLS was performed using STATA for the analysis of data. Results of the study revealed that board size and non-executive directors had significant relationship with ROA. Besides, female board and CEO duality were not significantly related to ROA. This study may helpful for the practitioners and policy makers to maximize the profit. Moreover, analyzing the relationship between board structure and financial performance of firms offering non-financial services can also be a worthwhile research.
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Purnomo, Paskah Ika Nugroho, and Oni Novilia. "Does Top Executive Gender Diversity Affect Earnings Management?" European Journal of Multidisciplinary Studies 6, no. 2 (June 10, 2017): 329. http://dx.doi.org/10.26417/ejms.v6i2.p329-329.
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This research examines the influence of female CEO, female CFO, female board of commissioners, and female audit committee on accrual based earnings management. This research presume that man and woman would act differently to solve a problem. This research using a sample of 304 companies listed on the Indonesian Stock Exchange that selected based on purposive sampling method. Hypothesis testing is performed by using multiple linier regression to examine the effect of each independent variable on the dependent variable. The result of this research showed that the position of CFO who is held by female have a significant negative effect on accrual based earnings management. While the position of female CEO, female board of commissioners, and female audit committee have no significant effect on accrual based earnings management.
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Yu, Chia-Feng (Jeffrey). "CEO Overconfidence, CEO Compensation, and Earnings Manipulation." Journal of Management Accounting Research 26, no. 2 (January 1, 2014): 167–93. http://dx.doi.org/10.2308/jmar-50722.
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ABSTRACT In the wake of recent financial crises and corporate failures, chief executive officers (CEOs) are often blamed for their overconfidence leading to earnings manipulation and excessive risks. Why is it then that these overconfident CEOs obtain job offers in the first place? This paper presents a novel explanation for the co-existence of CEO overconfidence and earnings manipulation observed in practice. In an agency model with an external capital market, I identify two potential reasons for a board to hire an overconfident CEO and design a contract that accommodates earnings manipulation: an internal motive, directed at maximizing the ex ante firm value, and an external motive, directed at enhancing the interim market valuation of the firm. The flip side, however, is that the firm can be more likely to become insolvent and bear greater risks of bankruptcy. Some policy implications and limitations are also discussed. JEL Classifications: D86; G34; M41.