Does Executive Compensation Work? Evidence from Shareholder Value Creation Over CEO Tenure

2008 ◽  
Author(s):  
James Jianxin Gong
Keyword(s):  
Executive Compensation ◽  
Value Creation ◽  
Shareholder Value ◽  
Ceo Tenure

DISCUSSION OF: Examining Shareholder Value Creation over CEO Tenure: A New Approach to Testing Effectiveness of Executive Compensation

2011 ◽  
Vol 23 (1) ◽  
pp. 29-36 ◽  
Author(s):  
Dan Weiss
Keyword(s):  
Executive Compensation ◽  
Performance Studies ◽  
Value Creation ◽  
Stock Options ◽  
Pay For Performance ◽  
Executive Pay ◽  
New Approach ◽  
Ceo Tenure ◽  
Executive Incentives ◽  
Managerial Power

ABSTRACT The executive compensation literature has explored the executive pay-for-performance relation in various contexts and reported mixed findings. As a result, the question of whether executive incentives, and particularly stock options, are effective continues to pose a puzzle to researchers. Gong (2011) uses a long window to examine effectiveness of executive compensation. This note discusses several broad aspects of pay-for-performance studies and their potential manifestation in this line of research and in Gong's study. Specifically, I elaborate on measurement issues and on each of the following aspects: (1) the underlying paradigm: arm's-length contracting versus managerial power; (2) the distinction between the pay-for-performance relationship and CEO overpay; (3) market efficiency; and (4) the settling-up problem.

scholarly journals Methods for share values assessment and shareholder value creation

2018 ◽  
Vol 6 (1) ◽  
pp. 39-49 ◽  
Author(s):  
Stefan Zimonjić ◽  
Milan Gavrilović ◽  
Miloš Roganović
Keyword(s):  
Value Creation ◽  
Shareholder Value ◽  
Values Assessment

scholarly journals Value creation measures: an industry-based study

2018 ◽  
Vol 67 (2) ◽  
pp. 426-444
Author(s):  
John Henry Hall
Keyword(s):  
Stock Returns ◽  
Value Creation ◽  
Stock Exchange ◽  
Shareholder Value ◽  
Value Added ◽  
Value Drivers ◽  
Content Type ◽  
Johannesburg Stock Exchange ◽  
Return On Capital ◽  
Market Value Added

Purpose The purpose of this paper is to identify the shareholder value creation measure best suited to express shareholder value creation for a particular industry. Design/methodology/approach The analysis was performed on 192 companies listed on the Johannesburg Stock Exchange, classified into nine different samples or industries. Five shareholder value creation measures were examined, namely market value added (MVA), a market-adjusted stock return, the market-to-book ratio, Tobin’s Q ratio, and the return on capital employed divided by the cost of equity. Findings An analysis of the nine categories of firms led to the identification of different measures that are suited to express value creation. Stock returns did not provide an appropriate value measure. Instead, depending on the specific industry, Tobin’s Q ratio, MVA, and the market-to-book ratio should be used to measure and express value creation. Practical implications For management, the value drivers identified for each industry present a clear indication of industry-specific variables upon which they can focus in operating activities to most efficiently increase shareholder value. Originality/value Unlike previous studies that use only one or two different shareholder value creation measures as dependent variables, this study uses five different value creation measures. Another contribution of this study is the compilation of a unique set of value drivers that explain shareholder value creation separately for each of the nine different categories of firms.

scholarly journals Bank Valuation Models – A Comparative Analysis

2017 ◽  
Vol 6 (3) ◽  
pp. 116
Author(s):  
Chitra Gunshekhar Gounder ◽  
M. Venkateshwarlu
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Value Creation ◽  
Shareholder Value ◽  
Market Price ◽  
Residual Income ◽  
Valuation Model ◽  
Residual Income Model ◽  
Income Model ◽  
Relative Valuation

The Bank valuation model was designed based on objective to fit  the most  applicable  valuation model for banks to help in forecasting bank specific decision and also forecast the market value of share. First study the accuracy and explanatory value of the value estimates from the residual income model compared to the estimates from the Relative valuation model for banks. Empirical evidence suggests that the residual income model is superior to the relative valuation model when it comes to measuring bank shareholder value. The results of the comparison suggest that value estimates from the residual income model are even more reliable for banks. On this basis, we conclude that residual income is an appropriate value estimate for the shareholder value of banks. There was positive significant relationship identified between the intrinsic value of bank share determined by RIV model and Market price of share in all the cases by performing correlation and Regression study. This study will be useful for forecasting the possible changes in market price. It was identified that determinants vary as per the working and regulatory condition as determinants impacting private, public and Indian banks were not similar so panel regression model will vary for each cases. It was also identified that Public Sector Bank in India shows more positive progressive trend as compared to private Sector Bank even after the fact that public Sector Bank has higher regulatory restriction as compared to Private Sector banks. This research will serve very useful for the banker to plan and take decision regarding shareholder value creation by implementing proper valuation model for getting appropriate value estimate and also adopting proper internal performance measure for having accurate and regular check on the process of value creation. 

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