scholarly journals Top Executives, Turnover and Firm Performance in Germany

10.3386/w4416 ◽  
1993 ◽  
Author(s):  
Steven Kaplan
Keyword(s):  
Firm Performance ◽  
Top Executives

When Are Pay Gaps Good or Bad for Firm Performance? Evidence from China

2020 ◽  
Vol 16 (5) ◽  
pp. 1030-1056
Author(s):  
Jin-hui Luo ◽  
Yuangao Xiang ◽  
Ruichao Zhu
Keyword(s):  
Firm Performance ◽  
Relative Deprivation ◽  
Nonlinear Effects ◽  
State Ownership ◽  
Firm Productivity ◽  
Ongoing Debate ◽  
Top Executives ◽  
Tournament Theory ◽  
Low Levels ◽  
Pay Inequality

ABSTRACTThere is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

scholarly journals The Effect Of Abnormal Pay Dispersion On Earnings Management

2016 ◽  
Vol 32 (2) ◽  
pp. 687
Author(s):  
Sanghyuk Byun ◽  
Youngjoo Lee ◽  
Ohjin Kwon
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Positive Association ◽  
Financial Statement ◽  
Executive Turnover ◽  
Relative Level ◽  
Top Executives ◽  
Pay Dispersion ◽  
Future Outcomes

This study examines the effect of the abnormal pay dispersion on earnings management. Prior studies find that pay dispersion among top executives affect firm performance and executive turnover. We expect that abnormal pay dispersion among top executives affects financial reporting practice as well as firm performance and turnover and provide evidence of positive association between abnormal pay dispersion and earnings management. This result suggests that executives are more likely to be engaged in earnings management to increase their compensation when they feel unfairness from the relative level of compensation. This finding helps financial statement users interpret firm performance and anticipate future outcomes by implying that additional managerial incentives for financial reporting are derived from internal pay dispersion. Our finding that abnormal pay dispersion leads to higher agency costs should also be of interest to shareholders.

Consequences of Executive Focus on Support Activities: Evidence from Executive Influence on Firm Tax Strategy

2020 ◽  
Author(s):  
Adam Olson
Keyword(s):  
Labor Market ◽  
Firm Performance ◽  
Knowledge Spillover ◽  
Top Executives ◽  
Market Consequences ◽  
Executive Ability

Should executives solely focus on core activities of the firm? Or is it beneficial to focus on both core and support activities? If core and support activities are substitutes, focusing on both activities will take energy and attention away from core activities. If core and support activities are complements, focusing on both activities may lead to synergies and knowledge spillover. Further, it could be the case that individual executive characteristics impact these relations. Using executive influence on firm tax strategy as a proxy for executive focus on support activities, I find that executive focus on support activities is associated with poorer firm performance and negative executive labor market consequences. These results are partially moderated by executive ability and background. Overall, the results suggest top executives perform best when focused solely on core activities, consistent with core and support activities being substitutes.

scholarly journals Impacts of Top Five Executives’ Compensation on Employee Wages

2021 ◽  
Vol 12 (1) ◽  
pp. 242
Author(s):  
Qianqian Li ◽  
Unyong Pyo
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Top Management Teams ◽  
Incentive Compensation ◽  
Top Management ◽  
Top Executives ◽  
Technology Firms ◽  
Performance Sensitivity ◽  
Long Run ◽  
Negative Impacts

This paper studies the impacts of incentive compensation to top five executives on employee wages. We employ pay-performance sensitivity to measure executive incentive compensation. Using the sample during 1992 – 2017, we find that executive compensation has negative impacts on employee wages. In addition, we examine the impacts of executive incentive compensation on employee wages in different industries and find that the impacts are more severe in technology firms than in non-technology firms. Finally, we show that the executives with higher incentive compensation are more likely to suppress employee wages in financially safe firms. Our results suggest that while top management teams are compensated as a team on average, they are compensated as isolated individuals on other aspects. Furthermore, firm performance may not always improve in the long run by granting high incentive compensation to top executives.

scholarly journals Effect of Employees’ Pay-performance Sensitivity on Future Firm Performance: Evidence from State-owned Listed Enterprises in China over 2007-2015

2019 ◽  
Vol 2 (3) ◽  
Author(s):  
Changzheng Zhang ◽  
Gaimei Yang
Keyword(s):  
Firm Performance ◽  
Stock Exchange ◽  
Innovative Behavior ◽  
Top Executives ◽  
Aversion Effect ◽  
Performance Sensitivity ◽  
The Future ◽  
Data Processing Tool ◽  
Positive Effect ◽  
Working Quality

Taking a balanced panel data consisting of 4365 firm-year observations drawn from the listed state-owned enterprises in Shanghai and Shenzhen Stock Exchange over 2007-2015 as the research sample, the paper examines the effect of the employees’ pay-performance sensitivity (PPS) on the future firm performance from the two competing perspectives of “incentive effect” and “risk-aversion effect”, adopting the method of multiple regression analysis based on OLS and applying the SPSS23 as the data processing tool. Theoretical analysis and empirical results demonstrate that there is a positive link between the employees’ PPS and the future firm performance. To improve the employees’ PPS can stimulate the engagement of the employees, improve their working quality, enrich their workplace innovative behavior, and further lead to higher future firm performance. Meanwhile, the positive effect of the employees’ PPS on the future firm performance is, on average, lower than that of the top executives’ PPS on the future firm performance. Implications of the findings are provided in the end.

Management Team Incentive: Dispersion and Firm Performance

2015 ◽  
Vol 91 (1) ◽  
pp. 21-45 ◽  
Author(s):  
Robert M. Bushman ◽  
Zhonglan Dai ◽  
Weining Zhang
Keyword(s):  
Firm Performance ◽  
Adjustment Costs ◽  
Recent Theory ◽  
Incentive Design ◽  
Cross Sectional ◽  
Team Members ◽  
Top Executives ◽  
Design Component ◽  
Team Incentive ◽  
Sectional Analysis

ABSTRACT Recent theory suggests that firms incorporate synergistic interrelationships among executives into optimal incentive design (Edmans, Goldstein, and Zhu 2013). We focus on Pay Performance Sensitivities (PPS) and use dispersion in PPS across top executives as a proxy for the incentive design component shaped by an executive team's synergy profile. We model optimal PPS dispersion and use residuals from this model to measure deviations from optimal. We find that firm performance is increasing (decreasing) in the residual when PPS dispersion is too low (too high). We conjecture that deviations from optimal are sustained by adjustment costs, finding that firms only close around 60 percent of the gap between target and actual PPS dispersion over the subsequent year. Viewing a team's equity grants as a vector, we provide evidence that firms use subsequent equity grants to actively manage PPS dispersion toward optimality. Cross-sectional analysis reveals that the deleterious effect of deviations from optimal is decreasing in the duration of a team's tenure together, and increasing in the importance of effort coordination across team members for firm performance. JEL Classifications: M41.

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