The Influence of Internal Control on Executive Pay-Performance Sensitivity: Based on the Background of the Reform of State-Owned Enterprise in China

2017 ◽  
Author(s):  
Xuan Zhang ◽  
Liang Zuo
Keyword(s):  
Internal Control ◽  
Executive Pay ◽  
Performance Sensitivity ◽  
State Owned Enterprise

Pay-performance sensitivity and corporate governance mechanisms: evidence from Tunisia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Meriem Ghrab ◽  
Marjène Gana ◽  
Mejda Dakhlaoui
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Pay For Performance ◽  
Simultaneous Equation ◽  
Executive Pay ◽  
Estimation Model ◽  
Content Type ◽  
Explanatory Variables ◽  
Performance Sensitivity ◽  
Ceo Pay

Purpose The purpose of this study is to analyze the CEO compensation sensitivity to firm performance, termed as the pay-for-performance sensitivity (PPS) in the Tunisian context and to test the robustness of this relationship when corporate governance (CG) mechanisms are considered. Design/methodology/approach The consideration of past executive pay as one of the explanatory variables makes this estimation model a dynamic one. Furthermore, to avoid the problem of endogeneity, this study uses the system-GMM estimator developed by Blundell and Bond (1998). For robustness check, this study aims to use a simultaneous equation approach (three-stage least squares [3SLS]) to estimate the link between performance and CEO pay with a set of CG mechanisms to control for possible simultaneous interdependencies. Findings Using a sample of 336 firm-years from Tunisia over the 2009–2015 periods, this study finds strong evidence that the pay-performance relationship is insignificant and negative, and it becomes more negative or remains insignificant after introducing CG mechanisms consistently with the managerial power approach. The findings are robust to the use of alternative performance measures. This study provides new empirical evidence that CEOs of Tunisian firms abuse extracting rents independently of firm performance. Originality/value This study contributes to the unexamined research on PPS in a frontier market. This study also shows the ineffectiveness of the Tunisian CG structure and thus recommends for the legislator to impose a mandatory CG guide.

scholarly journals The effect of race on CEO pay-performance sensitivity in South Africa

2019 ◽  
Vol 40 (2) ◽  
pp. 8-29
Author(s):  
Mark Bussin ◽  
Sean Barrett
Keyword(s):  
South African ◽  
Secondary Data ◽  
Executive Pay ◽  
Return On Equity ◽  
Black And White ◽  
Performance Sensitivity ◽  
Executive Remuneration ◽  
Significant Difference ◽  
Ceo Pay ◽  
Quantitative Descriptive

South Africa’s labour policies and the growing societal calls to better explain executive remuneration create a unique opportunity to examine the effects of race on CEO pay. This empirical research study sought to investigate the effects of race on the sensitivity of executive pay to corporate performance. The study aims to contribute to the literature by providing an evidence-based approach to understanding the effect of race on CEO remuneration. The research design was quantitative, descriptive and longitudinal in nature, utilising validated secondary data sources. The sample consisted of 19 black CEOs and a random sample of 45 white CEOs. All components of South African CEO remuneration studied were found to correlate strongly with PAT (Profit after Tax) and EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) and to a lesser degree with ROE (Return on Equity) and HEPS (Headline Earnings per Share). Black and white CEO mean remuneration was found to show no significant difference as a result of race. A notable difference found was the higher degree of payperformance sensitivity and variability seen within the black CEO sample. The study showed that race does not affect the level of CEO remuneration but does impact on pay-performance sensitivity and variability.

Executive pay bandwagon and stock price crash risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hong Luo ◽  
Junfeng Wu ◽  
Wan Huang ◽  
Yongliang Zeng
Keyword(s):  
Earnings Management ◽  
Internal Control ◽  
Stock Price ◽  
Tax Avoidance ◽  
Crash Risk ◽  
Executive Pay ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose This paper aims to investigate the impact of executives’ self-interested behaviors induced by the pay bandwagon on stock price crash risk in Chinese listed firms and attempt to shed light on the influencing channels of this effect. Design/methodology/approach The empirical analysis is based on the panel data set which contains information on the executives and stock price of 11,710 firm-year observations over the period 2007–2015. The multiple linear regression models are implemented to examine whether the executive pay bandwagon affects corporate future stock price crash risk. Then, earnings management, tax avoidance and overinvestment are applied as the behavior choice of executive pay bandwagon to analyze the potential influencing channels. Findings Results indicate that the lower the executives’ pay is than the median pay level of executives in firms of similar size and industry, incentives of pay bandwagon are stronger, leading to a higher future stock price crash risk. Moreover, evidence shows that the positive relationship between executive pay bandwagon and crash risk is attenuated when firms have strong external monitoring mechanisms such as Big Four auditors, cross-listing in the Hong Kong stock exchange, high marketization process and high institutional ownership. Then, some weak evidence supports that internal governance such as internal control plays the same moderating role. In addition, based on the path test, the stock price crash effect of the executive pay bandwagon has a complete tax avoidance intermediary effect and a partial earnings management intermediary effect. Originality/value This study contributes to the executive compensation literature from a psychological perspective on the economic consequences research brought about by the pay bandwagon for China’s listed firms. Moreover, this paper provides a supplement to the literature on factors which is completely different from previous studies that affect the future stock price crash risk.

scholarly journals Top executive pay in Spanish banking system

2014 ◽  
Vol 20 (3) ◽  
pp. 333-347 ◽  
Author(s):  
Idoya Ferrero-Ferrero ◽  
María Ángeles Fernández-Izquierdo ◽  
María Jesús Muñoz-Torres
Keyword(s):  
Corporate Performance ◽  
Banking System ◽  
Executive Pay ◽  
Short Term ◽  
Performance Incentives ◽  
Power Theory ◽  
Performance Sensitivity ◽  
Compensation Systems ◽  
Managerial Power

AbstractThis study examines consistency between compensation systems and corporate performance. The main purpose is to analyse how the performance has affected the short-term executive pay in Spanish banking system during the period 2004–2008. The main results reveal that pay-performance sensitivity is asymmetrical regarding the sign of the variation of the performance, since the pay-performance sensitivity is greater when the variation of the results is positive than when the variation of the results is negative. This finding is consistent with the managerial power theory and calls into question the role of the pay-performance incentives to align interest of executives and shareholders.

Executive Pay-Performance Sensitivity and Litigation

2013 ◽  
Vol 31 (1) ◽  
pp. 152-177 ◽  
Author(s):  
Zhonglan Dai ◽  
Li Jin ◽  
Weining Zhang
Keyword(s):  
Executive Pay ◽  
Performance Sensitivity
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