Compensation Committees' Treatment of Earnings Components in CEOs' Terminal Years

2011 ◽  
Vol 87 (1) ◽  
pp. 231-259 ◽  
Author(s):  
Mark R. Huson ◽  
Yao Tian ◽  
Christine I. Wiedman ◽  
Heather A. Wier
Keyword(s):  
Discretionary Accruals ◽  
Negative Effects ◽  
Compensation Committee ◽  
Earnings Components ◽  
Cash Compensation ◽  
Flow Through ◽  
Administrative Expenditures ◽  
New Evidence ◽  
Compensation Function ◽  
Compensation Committees

ABSTRACT Compensation committees face special difficulties when setting pay in the last years of a CEO's tenure. For example, incentives to manipulate earnings for the purpose of enhancing earnings-based compensation are greater in CEOs' terminal years. We predict that compensation committees are aware of these incentives and adjust the relative weights placed on earnings components in the cash compensation function to mitigate the problem. Consistent with our prediction, we find that in CEOs' terminal years, positive changes in discretionary accruals receive significantly less weight than other income components in determining cash compensation. This provides new evidence that not all gains flow through to compensation. We also find that in non-terminal years, managers' compensation is partially shielded from the negative effects of selling, general, and administrative expenditures (SG&A), but this effect reverses in the terminal period, consistent with the compensation committee discouraging investment in legacy assets by outgoing CEOs. Overall, our findings suggest that compensation committees treat components of earnings differently when setting pay in the terminal period. JEL Classifications: M41; J33.

scholarly journals Effects of season on ecological processes in extensive earthen tilapia ponds in Southeastern Brazil

2015 ◽  
Vol 75 (4 suppl 1) ◽  
pp. 97-107 ◽  
Author(s):  
E. G. P. Favaro ◽  
L. H. Sipaúba-Tavares ◽  
A. Milstein
Keyword(s):  
Low Cost ◽  
Stocking Density ◽  
Grazing Pressure ◽  
Southeastern Brazil ◽  
Negative Effects ◽  
Ecological Processes ◽  
Pond Ecosystem ◽  
Disposal Option ◽  
Flow Through ◽  
Dry Seasons

Abstract In Southeastern Brazil tilapia culture is conducted in extensive and semi-intensive flow-through earthen ponds, being water availability and flow management different in the rainy and dry seasons. In this region lettuce wastes are a potential cheap input for tilapia culture. This study examined the ecological processes developing during the rainy and dry seasons in three extensive flow-through earthen tilapia ponds fertilized with lettuce wastes. Water quality, plankton and sediment parameters were sampled monthly during a year. Factor analysis was used to identify the ecological processes occurring within the ponds and to construct a conceptual graphic model of the pond ecosystem functioning during the rainy and dry seasons. Processes related to nitrogen cycling presented differences between both seasons while processes related to phosphorus cycling did not. Ecological differences among ponds were due to effects of wind protection by surrounding vegetation, organic loading entering, tilapia density and its grazing pressure on zooplankton. Differences in tilapia growth among ponds were related to stocking density and ecological process affecting tilapia food availability and intraspecific competition. Lettuce wastes addition into the ponds did not produce negative effects, thus this practice may be considered a disposal option and a low-cost input source for tilapia, at least at the amounts applied in this study.

scholarly journals The Combined Effects of Financial Derivatives and Discretionary Accruals on the Value Relevance of Earnings and the Book Value of Equity

2015 ◽  
Vol 17 (2) ◽  
pp. 179 ◽  
Author(s):  
Etty Murwaningsari ◽  
Sidharta Utama ◽  
Hilda Rossieta
Keyword(s):  
Value Relevance ◽  
Positive Association ◽  
Wald Test ◽  
Discretionary Accruals ◽  
Financial Derivatives ◽  
Combined Effects ◽  
Price Model ◽  
Negative Effects ◽  
Book Value ◽  
Sfas 133

This study aimed to understand (1) the association between the use of discretionary accruals and financial derivatives, taking into consideration the implementation of revised PSAK 55 (1999), which was adopted from SFAS 133; (2) the combined effects of derivatives and discretionary accruals on the value relevance of earnings and equity. The analysis used panel data regressions and the Wald test over the period from 2001-2008. The results showed a positive or complementary association between derivatives and discretionary accruals. The positive association implied that managers tended to intensify the use of discretionary accruals to offset a higher use of derivatives. Price and return models demonstrated negative significant effects of derivatives on the value relevance of earnings. The return model showed negative significant effects of discretionary accruals on the value relevance of earnings but negative effects on the value relevance of equity with the price model.

Policy Uncertainty and Accounting Quality

2020 ◽  
Author(s):  
Sadok El Ghoul ◽  
Omrane Guedhami ◽  
Yongtae Kim ◽  
Hyo Jin Yoon
Keyword(s):  
Discretionary Accruals ◽  
Policy Uncertainty ◽  
Accounting Quality ◽  
Trading Behavior ◽  
Negative Effects ◽  
Media Freedom ◽  
Market Participants ◽  
Alternative Measures ◽  
And Performance ◽  
Using Data

Using data from 19 countries over the 1990-2015 period, we examine how economic policy uncertainty (EPU) affects accounting quality. We find that accounting quality, measured based on Nikolaev's (2018) model, increases during periods of high policy uncertainty. This relation is confirmed by the negative association between EPU and performance-adjusted discretionary accruals in a multivariate setting, and it extends to various alternative measures of earnings properties. We also find that the positive relation between EPU and accounting quality is more pronounced for government-dependent firms and firms with higher political risk. Additional analyses based on institutional investors' trading behavior, media freedom, and press circulation suggest that market participants' attention is a mechanism through which EPU affects accounting quality. Further, we find evidence that high accounting quality can mitigate the negative effects of EPU on corporate investment and valuation.

Restructuring Charges and CEO Cash Compensation: A Reexamination

2003 ◽  
Vol 78 (1) ◽  
pp. 169-192 ◽  
Author(s):  
Davit Adut ◽  
William H. Cready ◽  
Thomas J. Lopez
Keyword(s):  
Adverse Effect ◽  
Executive Compensation ◽  
The Other ◽  
Cross Sectional ◽  
Factors Associated ◽  
Cash Compensation ◽  
Restructuring Charges ◽  
Restructuring Charge ◽  
A Charge ◽  
Compensation Committees

Prior research generally concludes that compensation committees completely shield executive compensation from the effect of restructuring charges on earnings. In contrast, we find that after controlling for the growth in annual inflation-adjusted CEO cash compensation, compensation committees only partially shield CEO compensation from the adverse effect of restructuring charges on earnings, on average. In further analyses, we identify factors associated with cross-sectional differences in the extent of shielding. Specifically, we find that compensation committees appear to: (1) completely shield initial and subsequent restructuring charges for CEOs with long tenure, provided that the firm had not recorded a charge in the two immediately prior years; (2) provide no shielding of subsequent restructuring charges taken by short-tenured CEOs if the firm reported a prior restructuring charge within two years of the current charge; (3) and partially shield the other categories of restructuring charges. Overall, this study provides evidence that compensation committees evaluate the context of each restructuring in determining the extent to which they will intervene to shield executive compensation from the effect of these charges.

Microbial Communities on Leaf Material Protected from Macroinvertebrate Grazing in Acidic and Circumneutral Streams

1987 ◽  
Vol 44 (5) ◽  
pp. 1064-1070 ◽  
Author(s):  
Anthony V. Palumbo ◽  
Patrick J. Mulholland ◽  
Jerry W. Elwood
Keyword(s):  
Microbial Communities ◽  
Microbial Activity ◽  
Standing Stock ◽  
Low Ph ◽  
Negative Effects ◽  
High Ph ◽  
Leaf Material ◽  
Positive Effects ◽  
Leaf Surfaces ◽  
Flow Through

To determine how low pH and high aluminum concentrations directly affect microbial activity on decomposing leaves in streams, we examined microbial communities on leaf surfaces using in situ flow-through chambers which exclude macroinvertebrates. Bacterial production (thymidine incorporation) on leaf material was significantly higher at pH 6.4 than at 4.9 after 4 wk of incubation, and this difference persisted for the last 5 wk of the experiment. Microbial respiration was greater at the high pH site after 6 wk, and there were no significant differences in ATP standing stock. Concentrations of oxalate-extractable aluminum on the leaf material increased significantly within the first 4 wk of incubation and stabilized at significantly greater levels at low pH (4.66 mg∙g−1) than at high pH (1.70 mg∙g−1). Transferring leaf material from the high-pH to the low-pH stream had negative effects after only 1 wk of incubation. However, transferring from low pH to high pH did not result in significant positive effects until 4 wk after the transfers. The reduced microbial production and respiration in the low-pH stream imply that decomposition rates may be slower in acidified systems due, at least in part, to direct effects of acidification on microbial activity.

scholarly journals The possibilities of application of radiant wall cooling in existing buildings as a part of their retrofit

2019 ◽  
Vol 111 ◽  
pp. 03008
Author(s):  
Michal Krajčík ◽  
Ondřej Šikula
Keyword(s):  
Heat Transfer ◽  
Heat Flow ◽  
Numerical Simulations ◽  
Environmental Impacts ◽  
Thermal Response ◽  
Cooling Capacity ◽  
Existing Buildings ◽  
Negative Effects ◽  
Flow Through ◽  
Moderate Climate

In the following years and decades the increase in cooling capacity will put tremendous pressure on the energy infrastructure and severely increase the environmental impacts. In a moderate climate and well thermally insulated buildings like, e.g., in Europe, installation of low-exergy radiant systems could help alleviate these negative effects. Wall systems may be especially suitable for installation in existing buildings, however, their possible applications in buildings retrofit have not been fully explored. We therefore investigate the possible applications of wall cooling in existing buildings by numerical simulations of two-dimension heat flow through a wall fragment. Three wall systems are proposed and compared in terms of thermal response and heat transfer. The effect of various parameters is investigated to facilitate the design of the wall systems.

Too Busy or Well-Connected? Evidence from a Shock to Multiple Directorships

2018 ◽  
Vol 94 (2) ◽  
pp. 83-104 ◽  
Author(s):  
Anna Bergman Brown ◽  
Jing Dai ◽  
Emanuel Zur
Keyword(s):  
Firm Value ◽  
Performance Monitoring ◽  
Operating Performance ◽  
Costs And Benefits ◽  
Negative Effects ◽  
Multiple Directorships ◽  
Target Firms ◽  
Prior Literature ◽  
New Evidence ◽  
Gain Access

ABSTRACT Prior literature documents that multiple directorships are negatively associated with operating performance due to overly busy directors; however, multiple directorships may also increase firm value because directors gain access to valuable connections, resources, and information through their multiple appointments. This paper examines M&A that terminate target firms' entire boards as a negative shock to both board busyness and connections at other firms, as a complement to Hauser (2018). We document that firms experiencing a decrease in multiple directorships due to M&A exhibit improved operating performance, monitoring, and strategic advising, on average. Firms with the smallest decrease in board connections experience the greatest improvement in operating performance and advising, while firms with the greatest decrease in board connections experience null or negative effects on operating performance and advising. Our findings provide new evidence of the costs and benefits of multiple directorships based on board busyness and connections.

scholarly journals Are Banks Really Special? New Evidence from the FDIC-Induced Failure of Healthy Banks

2005 ◽  
Vol 95 (5) ◽  
pp. 1712-1730 ◽  
Author(s):  
Adam B Ashcraft
Keyword(s):  
Economic Activity ◽  
Bank Failures ◽  
Negative Effects ◽  
New Evidence

Recent bank failures are followed by significant and permanent negative declines in real county income. These declines are larger for small failures than for large failures per dollar of assets, are larger for bank failures than thrift failures, and are larger for bank closures than assisted mergers. More interestingly, the failure of even healthy banks has significant and permanent negative effects on economic activity.

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