scholarly journals Firm-specific knowledge assets and employment arrangements: Evidence from CEO compensation design and CEO dismissal

2016 ◽  
Vol 38 (9) ◽  
pp. 1875-1894 ◽  
Author(s):  
Heli Wang ◽  
Shan Zhao ◽  
Guoli Chen
Keyword(s):  
Ceo Compensation ◽  
Specific Knowledge ◽  
Knowledge Assets ◽  
Ceo Dismissal ◽  
Compensation Design

Minding the gap: the effect of CEO underpayment on firm-specific knowledge

2020 ◽  
Vol 24 (9) ◽  
pp. 2107-2125
Author(s):  
Linlin Wang ◽  
Zhaofang Chu ◽  
Wan Jiang ◽  
Yifan Xu
Keyword(s):  
Ceo Compensation ◽  
Equity Theory ◽  
Chief Executive ◽  
Specific Knowledge ◽  
Data Set ◽  
Content Type ◽  
Knowledge Based ◽  
Negative Effect ◽  
Compensation Gap ◽  
Specific Human Capital

Purpose This study aims to build on equity theory to assess the effect of chief executive officer (CEO) underpayment on the accumulation of firm-specific knowledge, accounting for the moderating effects of the CEO compensation gap and the clarity of the board’s informal hierarchy. Design/methodology/approach This study starts with all firms listed in the Execucomp database for the period 1992 to 2006. Then, all data sources are merged and entries with missing information are excluded. The final data set used for model estimations includes 1,152 firm-year observations. The command xtreg in Stata 12 with the fixed-effect option (fe) is used to estimate the relationship between CEO underpayment and firm-specific knowledge. Findings This study proposed and examined the role of CEO underpayment in discouraging CEO willingness to invest firm-specific human capital and, accordingly, to adopt a strategy of accumulating lower levels of firm-specific knowledge assets. The empirical analyses strongly support this argument. Moreover, CEO compensation gaps and the informal hierarchy of boards negatively moderated this relationship. That is, CEO underpayment had a weaker negative effect on firm-specific knowledge when the CEO compensation gap and the clarity of the board’s informal hierarchy were high. Originality/value Prior studies from the knowledge-based perspective have focused on the importance of firm-specific knowledge in enabling a firm to achieve superior financial performance. However, relatively little attention has been paid to CEOs’ willingness to accumulate firm-specific knowledge. The present study contributes to the knowledge-based view of the firm. This study integrates equity theory with the knowledge-based view of the firm by highlighting how unfair compensation of CEOs may discourage them to fully realize a firm’s potential to generate specific knowledge. By incorporating the fairness issue of CEO compensation into the knowledge-based view, this study contributes to a deeper understanding of the origins of firm-specific knowledge.

THE FIT BETWEEN CEO COMPENSATION DESIGN AND FIRM RISK.

2002 ◽  
Vol 45 (4) ◽  
pp. 745-756 ◽  
Author(s):  
J. S. Miller ◽  
R. M. Wiseman ◽  
L. R. Gomez-Mejia
Keyword(s):  
Ceo Compensation ◽  
Firm Risk ◽  
Compensation Design

Benchmark on themselves: CEO-directors’ influence on the CEO compensation

2019 ◽  
Vol 45 (7) ◽  
pp. 810-826
Author(s):  
Bill Francis ◽  
Iftekhar Hasan ◽  
Yun Zhu
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Design Procedure ◽  
Chief Executive ◽  
Data Availability ◽  
Outside Directors ◽  
Content Type ◽  
Public Firms ◽  
Executive Officers ◽  
Compensation Design

Purpose The purpose of this paper is to examine whether or not the chief executive officers’ (CEO) compensation is affected by the compensation of the outside directors sitting on their board, who are also CEOs of other firms. Design/methodology/approach The authors collect CEOs’ and CEO-directors’ compensation data from Execucomp. The authors then match the CEO-directors’ compensation with appointing firms’ CEO compensation and financial statements, from Execucomp and Compustat, respectively. The sample contains 7,561 firm-year observations from 1996 to 2010, with 1,213 distinct S&P 1500 firms and 1,563 distinct CEO-directors. The authors use ordinary least squared method with firm and year fixed effect in most of the analysis. Findings With both annual and excess compensation, the authors find strong evidence that CEO-directors’ compensation is related to the compensation of the CEO. Causally, when CEO-director overturns his/her excess compensation from negative to positive, the CEO is more likely to have similar upward change in the following year, while more interestingly, the opposite does not hold. These findings are persistent over time and remain robust to various additional tests. Research limitations/implications Due to the data availability, this paper investigates the S&P 1500 public firms. Originality/value It is the first work that investigates the link between board members’ external compensation and the CEO’s compensation. This sheds new light on the process of the CEO’s compensation design, in regard to both the information being utilized in the design procedure and the CEO’s influence on his/her own compensation. Second, this paper adds additional evidence to the choice of peer groups in compensation construction. Third, the authors enhance the understanding of the role of CEO-directors. The authors show that CEO-directors may be the ally of CEO, and help in justifying CEO’s compensation, especially when underpaid.

scholarly journals The Role of Accounting in the Design of CEO Equity Compensation

2007 ◽  
Vol 82 (2) ◽  
pp. 327-357 ◽  
Author(s):  
Mary Ellen Carter ◽  
Luann J. Lynch ◽  
I˙rem Tuna
Keyword(s):  
Financial Reporting ◽  
Ceo Compensation ◽  
Stock Option ◽  
Total Compensation ◽  
Equity Compensation ◽  
Restricted Stock ◽  
Compensation Design

We examine the role of accounting in CEO equity compensation design. For a sample of ExecuComp firms in 1995–2001, we find that financial reporting concerns are positively related to stock option use and total compensation, and negatively related to the use of restricted stock. We confirm our findings by examining changes in CEO compensation in firms that begin expensing options in 2002 or 2003. We find that these firms reduce their option use and increase their restricted stock use after starting to expense options but exhibit no decrease in total compensation. Taken together, our analyses suggest that favorable accounting treatment for options led to a higher use of options and lower use of restricted stock than would have been the case absent accounting considerations.

Benchmarking of Pay Components in CEO Compensation Design

2021 ◽  
Author(s):  
Yaniv Grinstein ◽  
Beni Lauterbach ◽  
Revital Yosef
Keyword(s):  
Ceo Compensation ◽  
Compensation Design

scholarly journals INTER-FIRM COLLABORATION AND INNOVATION PERFORMANCE FOR NEW-TO-MARKET PRODUCTS — THE MODERATING ROLE OF TECHNOLOGICAL AND SKILLS-RELATED KNOWLEDGE ASSETS

2016 ◽  
Vol 20 (06) ◽  
pp. 1650050 ◽  
Author(s):  
NUTTANEEYA ANN TORUGSA ◽  
ANTHONY ARUNDEL ◽  
WAYNE O’DONOHUE
Keyword(s):  
Transaction Costs ◽  
Transaction Cost Economics ◽  
Positive Association ◽  
Innovation Performance ◽  
Specific Knowledge ◽  
Knowledge Assets ◽  
Australian State ◽  
The Impact ◽  
And Training

This study examines the impact that the two types of knowledge assets — technological knowledge and skills-related knowledge — have on the link between inter-firm collaboration (IFC) and product innovation performance, measured by the sales share of new-to-market products. Drawing on transaction cost economics (TCE), we propose that the relation specificity of these knowledge assets that a firm shares with its partners (reflecting its level of research and development (R&D) and training investments, respectively) is a key determinant of the benefits and transaction costs associated with IFC. Using a two-wave panel of 480 innovating firms in the Australian state of Tasmania, we find that the observed positive association between IFC and the sales share of new-to-market products declines at high levels of R&D and training intensities. Our findings help strengthen an understanding of the role of transaction costs for relation-specific knowledge assets and the factors that could influence the value of IFC as a pathway to enhanced innovation performance for new-to-market products.

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