The Experts below are selected from a list of 360 Experts worldwide ranked by ideXlab platform

David F. Larcker - One of the best experts on this subject based on the ideXlab platform.

  • peer group choice Chief Executive Officer compensation and firm performance
    2021
    Co-Authors: David F. Larcker, Charles Mcclure, Christina Zhu
    Abstract:

    We examine the selection of peer groups that boards of directors use when setting CEO compensation. The challenge is to ascertain whether peer groups are selected to (i) attract and retain Executive talent and/or (ii) enable rent extraction by inappropriately increasing compensation. We find that the inferences in prior research are based on questionable methodological choices and do not generalize with an expanded sample. After addressing these concerns, we find that, on average, excess peer compensation has a negative association with future firm operating performance. However, significant variation in CEO talent and corporate governance exists within the cross-section of firms. The negative association between excess peer compensation and future performance is mitigated when the firm has a high level of CEO talent, and exacerbated when the firm has low-quality corporate governance. Thus, the economic consequences of peer-group choice are highly contextual. In general, we find that talent motivations explain more of the variation in the future performance implications of peer-group choice than corporate governance.

  • peer group choice and Chief Executive Officer compensation
    Research Papers, 2019
    Co-Authors: David F. Larcker, Charles Mcclure
    Abstract:

    We examine the selection of peer groups that boards of directors use when setting the level of CEO compensation. This choice is controversial because it is difficult to ascertain whether peer groups are selected to (i) attract and retain top Executive talent or (ii) enable rent extraction by inappropriately increasing CEO compensation. In contrast to prior research, our analysis utilizes the degree to which the observed compensation level of peers in the portfolio is unusual relative to all potential portfolios of peers the board of directors could have reasonably selected. Using a sample of 10,235 firm-year observations from 2008 to 2014, we estimate roughly 33% of board of directors’ choices appear to be associated with rent extraction, whereas the remaining 67% are associated with attracting and retaining high-quality CEO talent. Relative to firms that appear to select peers for aspirational labor market reasons, we find rent extraction firms have more structural governance concerns and realized negative governance outcomes. Over our sample period, we estimate the aggregate excess pay for rent extraction firms is approximately $5.4 billion, or 38% of their total pay.

  • Chief Executive Officer equity incentives and accounting irregularities
    Journal of Accounting Research, 2010
    Co-Authors: Christopher S Armstrong, Alan D Jagolinzer, David F. Larcker
    Abstract:

    This study examines whether Chief Executive Officer (CEO) equity-based holdings and compensation provide incentives to manipulate accounting reports. While several prior studies have examined this important question, the empirical evidence is mixed and the existence of a link between CEO equity incentives and accounting irregularities remains an open question. Because inferences from prior studies may be confounded by assumptions inherent in research design choices, we use propensity-score matching and assess hidden (omitted variable) bias within a broader sample. In contrast to most prior research, we do not find evidence of a positive association between CEO equity incentives and accounting irregularities after matching CEOs on the observable characteristics of their contracting environments. Instead, we find some evidence that accounting irregularities occur less frequently at firms where CEOs have relatively higher levels of equity incentives.

  • stock options and Chief Executive Officer compensation
    2007
    Co-Authors: Christopher S Armstrong, David F. Larcker, Chelin Su
    Abstract:

    Although stock options are commonly observed in Chief Executive Officer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific data and we find that stock options are almost always part of the optimal contract. This result is robust to alternative assumptions about the level of CEO risk-aversion and the disutility associated with their effort. In a supplementary analysis, we solve for the optimal contract when there are no restrictions on the contract space. We find that the optimal contract (which is characterized as a state-contingent payoff to the CEO) typically has option-like features over the most probable range of outcomes.Paper published as: "Endogenous Selection and Moral Hazard in Compensation Contracts" in Operations Research, Linthicum 58 (July/August 2010): 1090-1106.

  • Corporate governance, Chief Executive Officer compensation, and firm performance
    Journal of Financial Economics, 1999
    Co-Authors: John E. Core, Robert W. Holthausen, David F. Larcker
    Abstract:

    We find that measures of board and ownership structure explain a significant amount of cross-sectional variation in CEO compensation, after controlling for standard economic determinants of pay. Moreover, the signs of the coefficients on the board and ownership structure variables suggest that CEOs earn greater compensation when governance structures are less effective. We also find that the predicted component of compensation arising from these characteristics of board and ownership structure has a statistically significant negative relation with subsequent firm operating and stock return performance. Overall, our results suggest that firms with weaker governance structures have greater agency problems; that CEOs at firms with greater agency problems receive greater compensation; and that firms with greater agency problems perform worse.

Gaafar Mohamed Abdalkrim - One of the best experts on this subject based on the ideXlab platform.

  • Chief Executive Officer compensation corporate governance and performance evidence from ksa firms
    Corporate Governance, 2019
    Co-Authors: Gaafar Mohamed Abdalkrim
    Abstract:

    This paper aims to examine the relation between Chief Executive Officers (CEOs) compensation and organizational performance in KSA listed companies. It also aims at investigating the effect of corporate governance mechanisms according to this relation.,The researcher uses unbalanced panel data regression analysis on a sample of 181 KSA listed companies from 2005 to 2014.,The estimation result suggests that CEO Compensation is positively associated with firm performance. The results also show that corporate governance positively and significantly affect the relation between CEO Compensation and performance.,This research, like any other, has some limitations that can be addressed by future research. The important limitation of this research is that the generalizability of the results is limited by the fact that the majority of the firms in the sample are from material sector which is represented by 42 (32 per cent) firms versus pharmaceutical sector which is represented by only one (1 per cent) firm. Therefore, a future research can tackle the effect of CEO compensation, corporate governance on future firm performance independently.,The findings have some important implications for stakeholders such as policymakers, listed firms managers, business owners and academic researchers in the emerging KSA market. Besides, understanding the relation between CEO compensation, corporate governance and firm performance can aid the success of corporate modernization and economic reform in KSA.,The research attempts to fill a substantial gap in the literature by providing the first rigorous econometrics evidence on CEO compensation, corporate governance and firm performance. In addition, it provides interesting insight for researches, decision-makers and board members in KSA.

Mani Sethuraman - One of the best experts on this subject based on the ideXlab platform.

Meghna Singhvi - One of the best experts on this subject based on the ideXlab platform.

  • Chief Executive Officer power and board gender diversity
    Finance Research Letters, 2021
    Co-Authors: Jennifer Brodmann, Ashrafee Tanvir Hossain, Meghna Singhvi
    Abstract:

    Abstract This study explores the role of Chief Executive Officer (CEO) power in determining board gender diversity. We constructed a CEO power index to measure gender diversity. We find that CEO power exerts a positive influence on board gender diversity. This finding is robust when compared to alternate measures of CEO power and board diversity. We also conduct various robustness and endogeneity tests, such as entropy balancing, two-stage least squares regression analysis, lead-lag specification, and system generalized method of moments, and our results survive in all cases. In the cross-sectional setup, we determine that firms with a larger board, a younger board, and higher level of institutional ownership most effectively influence the association between CEO power and gender diversity.

  • Chief Executive Officer power and corporate sexual orientation equality
    Social Science Research Network, 2021
    Co-Authors: Jennifer Brodmann, Ashrafee Tanvir Hossain, Abdullah Al Masum, Meghna Singhvi
    Abstract:

    We examine the role of Chief Executive Officer (CEO) power in Corporate Sexual Orientation Equality (CSOE), measured by corporate support for employees with alternate sexual orientations (i.e., Lesbian, Gay, Bisexual, Transgender, and Queer – LGBTQ). We find that CEO power is an obstacle to promoting CSOE. Our finding is robust to different model specifications and a battery of endogeneity checks. In the cross-section, we find that the negative association between CEO power and CSOE is more (less) pronounced for firms with weaker (stronger) external monitoring, with a lower (higher) level of transparency, and those located in a more (less) religious county. We also find evidence that the financial market appreciates it when powerful CEOs are less engaged in possibly controversial promotional activities, such as LGBTQ-friendliness.

Nina T Dorata - One of the best experts on this subject based on the ideXlab platform.

  • corporate governance and Chief Executive Officer compensation
    Corporate Governance, 2008
    Co-Authors: Steven T Petra, Nina T Dorata
    Abstract:

    Purpose – This paper aims to examine whether there is an association between the level of performance‐based incentives offered to CEOs and the composition of firms' boards of directors and the compensation committee.Design/methodology/approach – Univariate tests are used to test the relation between the level of performance‐based incentives and corporate governance structures. A logistic regression analysis is used to predict the probability of CEOs receiving low performance‐based incentives when various characteristics of firms' boards of directors and compensation committees exist.Findings – The authors find the presence of CEO duality reduces the likelihood of lower levels of performance‐based incentives offered to CEOs. Additionally, the authors find CEOs are more likely to receive lower levels of performance‐based incentives when the majority of the compensation committee members serve on less than three other boards, and when the size of the board is less than or equal to nine members.Research limit...