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Hospital CEO salaries have grown quickly over the past two decades. We investigate correlates of rising nonprofit hospital CEO pay between 2012 and 2019 by merging compensation data from Candid's IRS 990 forms with hospital data from the National Academy for State Health Policy Hospital Cost Tool. Almost half of the measured increase in CEO compensation (44.5%) accrued to a "base case" CEO, who was leading a non-teaching hospital system or independent hospital with fewer than 100 beds that earned 0 profits and provided no charity care. Another 28.5% of the measured salary increase resulted from changes in the generosity with which observable metrics were rewarded, particularly the reward for heading a system with 500 or more beds. The remaining 27% resulted mostly from hospital systems or single hospitals that increased their profits or bed size over time. The increase in CEO compensation associated with leading larger healthcare systems and earning greater profits may explain the increase in healthcare system consolidation which has occurred over the last several years. [ABSTRACT FROM AUTHOR]

Although previous studies have extensively explored the relationship between corporate profitability and innovation, the specific impact of profitability sustainability on corporate innovation has not received sufficient attention. Furthermore, while Corporate Social Responsibility (CSR) has been recognized as significantly influencing corporate innovation, its moderating role between profitability sustainability and innovation remains underexplored. This study fills these research gaps by empirically analyzing the impact of profitability sustainability on corporate innovation and examining in detail the multiple moderating effects of CSR. This paper employs Ordinary Least Squares (OLS) and Instrumental Variables Two-Stage Least Squares (IV-2SLS) methods, using data from dairy companies listed on China's A-share and H-share markets from 2016 to 2021, to empirically analyze the impact of profitability sustainability on corporate innovation and to examine in detail the multiple moderating effects of CSR. The results indicate that profitability sustainability significantly promotes corporate innovation. CSR directly moderates this relationship, and along with other moderating variables (financing constraints, executive compensation), it plays a complex role in this interaction, potentially inhibiting the positive connection between profitability sustainability and innovation when acting alone, but significantly enhancing innovation when interacting with CSR. Heterogeneity analysis shows that non-state-owned and H-share listed dairy companies exhibit a more significant positive effect of profitability sustainability on innovation compared to state-owned and A-share listed companies. These findings highlight the key moderating role of CSR in promoting innovation within the dairy industry and offer new perspectives on how profitability sustainability can drive corporate innovation. [ABSTRACT FROM AUTHOR]

Purpose: The main objective of this research is to identify the mechanisms adopted by the boards of directors and compensation committees of the companies listed in the B3 Novo Mercado segment to align the executive compensation strategy with the business strategy. Methodology: This is an applied and exploratory qualitative research, based on the method of interviews with specialists. Primary data was collected through interviews with board members and/or members of compensation committees with extensive experience in defining and approving executive compensation strategies. For content analysis, a three-level coding technique (open, axial, and theoretical) was applied using Atlas.TI software. Findings: The results obtained point to an evolution of the proposed theoretical model through the incorporation of subcategories of analysis that emerged from the empirical data collected in the interviews with specialists. Originality: The main contribution of this study is to point out the facilitating elements and main obstacles to the alignment between compensation strategy and business strategy, from the point of view of the experts involved in the process, and to propose a better practices guide for boards of directors and compensation committees. [ABSTRACT FROM AUTHOR]

The steady increase of chief executives' compensation in both public and private universities has long been at the centre of public debate and has received a lot of criticism in the UK. As higher education is considered as an industry, a pay for performance relationship is expected. This paper differs by demonstrating that UK Vice Chancellors consider incentives other than remuneration in their career progression. By constructing a comprehensive dataset of UK Vice Chancellors covering academic years 2012/2013 to 2016/2017, we demonstrate that UK university chief executives, especially if young, are willing to accept lower salaries when they interpret their role as a springboard for visible high‐profile positions in the public arena. [ABSTRACT FROM AUTHOR]

The article focuses on the systemic undervaluation of wages in Australia's Early Childhood Sector (ECS) and the challenges this creates for workforce sustainability. Topics include the historical and political economy context of low wages, theoretical frameworks such as feminist-Marxist perspectives on wage determination, and recent policy developments aimed at addressing wage disparities and improving conditions in the sector.

Purpose: Board members are critical in resolving agency conflicts. However, many are unable to perform their function due to their distance, as they are not present at board meetings. As of Instruction no. 561, the Brazilian Securities and Exchange Commission (CVM) regulated remote voting for Boards of Directors, allowing for greater attendance at meetings and, as a result, increased involvement. In this context, this research examines the effect of remote voting by Boards of Directors on executive compensation and financial performance of publicly traded firms in Brazil. Originality/value: This research is innovative in the sense that it examines the effect of the Board of Directors remote voting on the CEO compensation and financial performance of the firm, using an innovative methodology. Design/methodology/approach: We applied a quasi-experimental method (difference-in-differences) to assess the effects of a given group (treatment) before and after the event, significantly reducing endogeneity when considering an exogenous shock to the system. Findings: As a result, the estimation of the main model reveals statistically significant differences between the effects of treatment and control on profitability and executive remuneration, indicating that remote voting mitigated agency problems by generating a substitution effect for explicit incentives (as evidenced by the decrease in executive remuneration) and by providing greater accounting performance for companies. [ABSTRACT FROM AUTHOR]

Objective To reduce the conflict of interests between managers and shareholders, it is crucial to focus on the sharing of benefits. Managerial remuneration is one way to address this conflict and serves as a tool to align managers' perspectives and performance with the goal of increasing shareholder wealth. Cash rewards for managers should be performance-based to ensure their alignment with shareholder interests. When designing the CEO's salary package in companies, the role of institutional investors is significant. Agency theory highlights the problems that arise when owners delegate the management of the company to managers. To mitigate agency conflicts, managerial rewards should be tied to the value created for shareholders. One of the primary methods for measuring managerial performance is through accounting reports, which act as tools for assessing and motivating managerial performance. Given these points, the aim of this research is to provide a model for predicting the sensitivity of CEO compensation using meta-heuristic algorithms, specifically genetic algorithms and particle swarm optimization. Methods The statistical population of this research comprises all companies listed on the Tehran Stock Exchange from 1390 to 1400. To select the sample, a systematic elimination method was employed, resulting in a sample of 110 companies. Based on the classification of research according to its purpose, the current study is applied in nature. Additionally, it is a quasiexperimental study within the domain of descriptive research (non-experimental survey). Data collection methods for this research include document analysis, internet research, and library study, depending on the specific requirements. In this research, 12 parameters influencing the sensitivity of CEO compensation were selected: institutional ownership, family ownership, comparability of financial statements, profit management, conditional conservatism, income and cost matching, market added value, corporate acquisition, debt contracts, and cost behavior (categorized into three types: changes in asset returns, changes in sales revenue, and changes in operating costs). These parameters were used as inputs for the data mining model. The sensitivity of CEO service compensation was chosen as the output parameter. Three data mining models were created by separating the cost behavior parameter, and for comparison, three linear regression models were also employed. Results The results demonstrate the superiority of the deep neural network model in terms of the coefficient of determination and MSE index. This superiority holds true for all three data mining models compared to the three linear regression models. Among the data mining models, the third model, which incorporates the cost behavior parameter of changes in operational costs, produced the best results. The second model, which includes the cost behavior parameter of changes in sales revenue, achieved the next best results. Finally, the first data mining model, which uses the cost behavior parameter of asset return changes, delivered the weakest results. Conclusion The application of deep neural networks, optimized by meta-heuristic algorithms, can create predictive models based on real data, which can be used for management decisions and enhancing service compensation processes in organizations. These methods offer the potential to improve CEO performance and the quality of services provided by organizations by leveraging existing data and artificial intelligence algorithms. Furthermore, this research can assist investors and economic decision-makers in more accurately analyzing and predicting the sensitivity of CEO compensation using deep neural networks and metaheuristic algorithms. [ABSTRACT FROM AUTHOR]

The Florida Coalition Against Domestic Violence (FCADV) was a nationally recognized nonprofit until 2019 when scandalous newspaper headlines such as "$7.5 million payday for the head of this Florida nonprofit" alerted the public that something was amiss. The nonprofit was sued by the state and disbanded. In this teaching case, we describe the history of the nonprofit coalition and the crisis that emerged. This case is appropriate for undergraduate and graduate students. Students put themselves in the position of learning from the lessons of FCADV and designing a new and improved nonprofit coalition. The teaching tools address learning objectives in board governance, leadership, human resources, ethics, finance, public policy, and public management courses. [ABSTRACT FROM AUTHOR]

This article addresses the critical issue of private benefits in corporate governance, focusing on how executives or controlling shareholders exploit their positions for personal gain, often at the expense of shareholder value and corporate performance. This issue is highly relevant, as it directly impacts the alignment between executive and shareholder interests and can lead to inefficiencies in corporate governance. The primary purpose is to examine the various forms of private benefits, such as excessive compensation and self-serving strategic decisions, and to explore governance mechanisms that can mitigate these practices. The choice of private benefits as the research object is justified by their widespread and detrimental impact on corporate performance and sustainability. This article employs conceptual analysis, grounded in agency theory, to investigate how performance-based compensation, independent audit committees, and increased transparency can reduce the extraction of private benefits. Drawing on key studies, it analyzes the ways in which these governance mechanisms align executive actions with long-term corporate goals. The main findings reveal that private benefits manifest in forms like excessive compensation and biased strategic decisions, undermining long-term performance. Strong governance frameworks, including performance-based pay and independent oversight, are essential in curbing such behaviors. The results of this article have practical applications for corporate boards, regulatory bodies, and governance consultants. They can be used to improve governance policies, ensuring that executive compensation and strategic decisions are in line with sustainable corporate practices, benefiting both shareholders and the broader business ecosystem. [ABSTRACT FROM AUTHOR]

We examine whether mandatory adoption of say on pay increases executives' incentives to engage in insider trading to compensate for the negative impact of say on pay on the value of their explicit compensation packages. Our empirical design exploits the staggered adoption of say on pay laws across 14 countries over the 2000–2015 period. We find that mandatory adoption is associated with a material increase in insider trading profits, especially in firms where executive pay is most affected. The increase in insider trading profits is driven mostly by more frequent and larger profitable insider sales, consistent with executives' desire to reduce their greater exposure to firm-specific risk while increasing their trading profits. Overall, our results highlight the importance of considering potential effects on insider trading incentives when designing compensation reforms and when assessing their effectiveness. Data Availability: All data used in the paper are available from cited public sources. JEL Classifications: G30; G34; G38; J33; K22; M12; M16. [ABSTRACT FROM AUTHOR]

Research Question/Issue: We examine the impact of the age of compensation committee (CC) members on CEO compensation. Sociological theory suggests that age is a significant demographic factor influencing behavior. We argue that monitoring intensity increases with age because older directors are more likely to commit to their fiduciary duties. Research Findings/Insights: Using FTSE 350 firms for the period 2002 to 2017, we find that CC members' age is negatively associated with the level of CEO pay but positively associated with pay–performance sensitivity after controlling for risk aversion attitude, experience in board monitoring, knowledge of the firm, and other firm and CEO characteristics. The relationships remain robust to alternative measures for age and compensation, using two‐stage least squares and high‐dimensional fixed effects models. Consistent with the view that older individuals tend to hold higher ethical standards and concomitant closer monitoring, we find that age effects are sensitive to the influence of ethical factors and are strongest for those firms for which intense monitoring is most needed. This suggests that age operates via older directors carrying out their roles more assiduously. We further show that our findings are less likely to be driven by director reputational effects, and the relationship between CC member age and CEO compensation persists even when we control for multiple dimensions of culturally inherited attributes of the CC members. Theoretical/Academic Implications: Despite the large literature on the influence of demographic characteristics on corporate governance, this study is the first on the monitoring effect of CC members' age. It contributes to the literature on the influence of demographic characteristic. It also contributes to the literature on CEO compensation by identifying a demographic factor—age—as a determinant of CEO pay, after controlling for the economic and corporate governance variables of the firm. Practitioner/Policy Implications: This study highlights the role of demographic factors in explaining the monitoring of the CEO compensation contracting process and provides timely evidence on the recent regulatory changes. [ABSTRACT FROM AUTHOR]

Prior research has argued that companies in transition economies engage in corporate social responsibility (CSR) activities to achieve political goals, such as building connections with the government. However, it is unclear why chief executive officers (CEOs) agree to make these politically driven CSR decisions that mainly benefit the controlling shareholders. We show that controlling shareholders may "bribe" the CEOs with greater compensation or perks—a form of economic rents extracted by the CEOs—to make CSR decisions, and such a pattern is more salient in local government-owned companies. We reason that these CSR activities reflect implicit contracting between the controlling shareholders and the CEOs. Through cross-section analyses, we find that the CEO's economic rents vary with local government fiscal needs, the firm's governance structure, and CEO power. Furthermore, we demonstrate that increases in CSR-linked compensation lead to a decline in shareholder value. Data Availability: All data are available from public databases identified in the paper. JEL Classifications: D72; M12; P26. [ABSTRACT FROM AUTHOR]

This literature review summarizes previous quantitative archival research on sustainability‐related executive compensation (SREC) as the overarching research method in this field. Based on stakeholder agency theory, we included 66 peer‐reviewed studies on the determinants (governance, financial, and sustainability drivers) and consequences of SREC on firm value (financial and sustainability consequences). Regarding SREC, we differentiated between the Chief Executive Officer (CEO) and the total executive level. Although we note a lower attraction of SREC research on possible determinants, there are clear indications that SREC has a positive effect on sustainability performance. In contrast to the business case argument for sustainability, this is not true for financial performance. We find major limitations and research gaps in previous studies that should be recognized in future studies (e.g., differentiation between symbolic and substantive use of SREC). Our results are mainly important for researchers, business practice and regulatory bodies. [ABSTRACT FROM AUTHOR]

Aiming to shed light on the interplay of board‐related mechanisms and their influence on sustainable development, this study examines configurations of corporate governance conditions that are associated with high and low ESG performance. Fuzzy‐set qualitative comparative analysis was used, resorting to a sample of S&P 500 manufacturing companies that are committed to contributing to solve the climate change societal challenge (i.e., SDG13). The configurational analysis was also extended to the all sample of S&P 500 companies to assure the generalizability of the findings and provide additional insights. The findings support the functional view of the role of the board, emphasising the notion that configurations (i.e., combinations of conditions) are more important to sustainable development than any single condition. Different from past research, this study emphasises the importance of defining and implementing a CSR strategy to achieve high ESG performance, which is always present in configurations leading to the outcome of interest. Furthermore, the results also suggest that a monitoring mechanism should always be present, while an incentive alignment mechanism is only required in some circumstances. Moreover, the results show that ESG‐related executive compensation should be complemented with other mechanisms, such as board monitoring, to be effective. This study contributes to the debate on whether sustainability‐related performance alignment incentives and monitoring mechanisms act as complements or substitutes. The findings show that linear approaches might not capture the all picture, suggesting that a more nuanced view should be used in future studies, and can inform companies' strategic decisions regarding sustainability. [ABSTRACT FROM AUTHOR]

The controversy surrounding executive compensation has received attention in the popular press and academic literature. We explore executive compensation through the lens of Catholic Social Teaching (CST), outline the basic principles of CST and compare and contrast them with corporate social responsibility (CSR), and identify human dignity, in contrast to profit maximization, to be the differentiator between the two. Next, we use CST to develop a model for measuring excessive executive compensation. We then conduct a cluster analysis of our measure of excessive compensation with another CST variable: investment in employees. Lastly, we examine differences in the clusters regarding environmental performance. In the full sample, we find that firms that pay their executives more excessively invest less in employees and that environmental performance is significantly and positively correlated with excessive executive compensation. This suggests that firms either pay their executives excessively for better environmental performance or use "greenwashing" to distract society from the justice issues surrounding executive compensation. Next, we break the sample into clusters based on excessive executive compensation and investment in employees. Within the cluster that most closely aligns with CST, a greater investment in employees suggests greater environmental performance; solidarity among people is positively and significantly related to solidarity with the earth. However, in cluster two, environmental performance is positively related to higher excessive executive compensation which is also related to lower investment in employees; in cluster one, there is no such relationship. [ABSTRACT FROM AUTHOR]

This paper examines managers' explanations of firm performance (i.e., management attributions) in a large sample of the Management's Discussion and Analysis (MD&A) section of annual reports. We find that managers of poorly performing firms tend to attribute firm performance to external factors. We further propose a prediction model to decompose management external attributions into a credible part and a strategic part and find that both components are negatively related to firm performance. This evidence suggests that management external attributions partially reflect the actual impact of external conditions on firm performance and are not entirely subject to managerial opportunism. Additionally, we find that investors react more strongly to firm performance when managers provide credible external attributions, especially for firms without a bad reputation for strategic external attributions. We also show that executive compensation is less sensitive to firm performance when managers make more strategic external attributions. [ABSTRACT FROM AUTHOR]

This study analyzes the impact of the characteristics of sustainable boards and NGO directors on biodiversity disclosures. This research uses data from 481 US companies that are taken from Standard & Poor's 500 (S&P), ASSET4, for the period 2009–2020 (5616 company‐year observations). Data on NGO directors is provided by MSCI's GMI Rankings database. A panel data analysis with fixed effects models is used to estimate the results. The results also indicate that a sustainable board structure (proxied by Chief Sustainability Officers (CSOs) and Sustainability‐related executive compensation) is positively correlated with biodiversity disclosure. Our empirical results also show that the moderating role of NGO directors has a greater interaction effect with the characteristics of sustainable boards and biodiversity information disclosure initiatives. The results are also consistent for exploitative and nonexploitative industries, as well as for the pre‐ and post SDG (14–15) of the agenda 2030. In addition, the framework of SDG (14‐15) and the strategic plan of partnership with the Agenda of 2030 show a positive relationship with biodiversity disclosure. We then develop a causal relationship through the positive impact of NGO directors serving on the board of directors on a strategy of partnerships, onboarding, and increase/decrease of NGO directors—possible mechanisms by which NGO directors can influence biodiversity disclosure. Overall, our findings suggest that while NGO directors can potentially be appointed to a company's board of directors for legitimization reasons, these directors are associated with better biodiversity disclosure. The study has valuable implications for enduring board members, practitioners, and scholars. The results are supported by theories of legitimacy, stakeholders and resource dependence. However, evidence on this research question is still unknown and critical, especially in the context of stakeholder‐emphasized governance systems (continental Europe, Japan) and developing countries where there is a lack of knowledge application of regulations related to the disclosure of biodiversity. [ABSTRACT FROM AUTHOR]

Based on the cognitive and upper echelons theories, this study investigated the impact of executives' green cognition on corporate green innovation using panel data on Chinese A-share listed companies from 2007 to 2021. The findings revealed that companies with executives who possess green cognition demonstrated a minimum increase of 12.5% in green innovation compared with companies without such cognition. The mechanism analysis suggested that executives' green cognition promotes green innovation by alleviating managerial myopia and attracting green investors. The heterogeneous effects analysis indicated that a positive effect is predominantly observed among non-heavy-polluting industries and regions with a lower intensity of environmental regulations. This study identified the positive role of executives' green psychological cognition, thereby providing insights into incorporating psychological cognitive factors in executive selection to enhance the level of corporate green innovation and promote the construction of corporate quality management. [ABSTRACT FROM AUTHOR]

We investigate the impact of director experience in integrating social responsibility criteria into CEO compensation (corporate social responsibility [CSR] contracting) in other firms on the adoption and design of CSR contracting within focal firms and address the question of whether such experience brings information or pressure to focal firms. Using hand‐collected data of a sample from the Standard and Poor's (S&P) 500 index, we find that director experience is positively associated with the likelihood of CSR contracting adoption. This effect is particularly pronounced in challenging situations where firms require more information for the adoption, such as when they have diverse stakeholders with varying CSR interests and operate in unpredictable market environments. Additionally, director experience has a positive effect on the use of quantitative CSR targets in initial contract design, especially in these challenging scenarios. Interestingly, the positive effect of director experience on CSR contracting adoption does not vary with firms' peer legitimacy pressure. Our findings suggest that director CSR contracting experience provides valuable information that fosters learning rather than imposing institutional pressure that leads to isomorphism when firms make CSR contracting decisions. By disentangling the intertwined role of director experience, our research offers insights into how it influences the adoption and design of innovative management control practices within firms. [ABSTRACT FROM AUTHOR]

Regulatory focus theory theorizes that there are two distinct dispositional foci of self-regulation (promotion focus and prevention focus) that impact individuals' motivational tendencies to achieve their decision-making processes. This study integrates regulatory focus theory with upper echelons theory to investigate how CEO regulatory focus (i.e., higher degrees of promotion focus relative to prevention focus) influences corporate strategic outcomes, particularly regarding the pursuit of corporate social responsibility (CSR) performance and firm performance. This study uses data collected from the annual reports of S&P 1500 firms in the US from 2000 to 2018. Results show a negative association between CEOs who are predominantly promotion-focused and CSR performance. This negative association is diminished in firms with better corporate governance (i.e., higher CEO equity compensation and greater institutional ownership). The results also show that CSR plays a mediating role in the relationship between CEO regulatory focus and firm performance. These findings not only contribute to the existing literature by highlighting the role of CEO regulatory focus in shaping CSR initiatives but also shed light on its implications for firm performance. [ABSTRACT FROM AUTHOR]

The widespread critical evidence surrounding executive compensation of listed corporations has boosted shareholder activism in recent decades. The say‐on‐pay (SOP) mechanism—a vote in which shareholders express their (dis)agreement with executive pay designs—is one of the corporate governance mechanisms that has led to this activism among listed firms. Merging agency and socioemotional wealth (SEW) arguments, this paper analyzes how effective SOP voting results are among listed family firms in terms of CEO compensation efficiency and equity. Using a sample of UK listed firms from 2011 to 2018, our results show that SOP effectiveness is positively influenced by family ownership and is strongly moderated by family involvement in management and in governance as well as by family generation. Our findings stress the strong family effect and the ethical perceptions of family shareholders on SOP voting, showing how family participation in the firm encourages fairer and more aligned CEO compensation packages. SOP institutional and practical implications oriented to preserve shareholder value and family wealth are finally outlined. [ABSTRACT FROM AUTHOR]

Large Japanese corporations which have accumulated substantial reserves are now under pressure to spend them, but on what, or on whom? Should they increase their (domestic) capital and R&D expenditure, which languished between 2000 and 2020; or invest more in their employees, whose wages have stagnated; or increase their shareholder returns, which have already surged; or raise executive remuneration closer to overseas counterparts? This article examines tensions in recent developments in Japan's political economy, from Society 5.0 to Kishida's 'new form of capitalism' and Keidanren's 'rebuilding the middle class', from the perspective of these dilemmas. [ABSTRACT FROM AUTHOR]

Taking the low‐carbon city pilot policy as a quasi‐natural experiment and using the data of Chinese listed companies, this paper examines the impact and mechanism of low‐carbon city pilot policy on the firms' executive‐employee pay gap. The results show that the implementation of low‐carbon city pilot policy significantly promotes the executive‐employee pay gap. Mechanism analysis results show that the low‐carbon city pilot policy promotes the executive‐employee pay gap mainly by enhancing the risks of enterprises' environmental violations and increasing management complexity. Heterogeneity analysis shows that the promoting effects of the pilot policy are more obvious in state‐owned enterprises, large‐scale enterprises, high‐carbon emission enterprises, and enterprises in labor‐intensive industries. The paper provides a decision‐making reference for coordinating common prosperity progress and corporate high‐quality development in the context of carbon reduction transformation. [ABSTRACT FROM AUTHOR]

The article discusses the influential career of Michael Jensen, a renowned scholar in financial theory, who co-authored the seminal paper "Theory of the Firm" in 1976. Jensen's wide-ranging research interests included mutual fund performance, stock market efficiency, and corporate governance. The article also explores Jensen's views on CEO pay, corporate objectives, and the role of private equity in increasing corporate values. Jensen's contributions to the theory of the firm are highlighted, emphasizing his evolving perspectives on the public corporation and management practices over the years. [Extracted from the article]

The article "CEO bonus plans—And how to fix them" explores the flaws in CEO and executive bonus plans, advocating for improvements to avoid counterproductive incentives that may harm long-term company value. It emphasizes the importance of using performance measures, thresholds, and pay-performance relations in bonus plans, while cautioning against the negative impacts of non-linear plans, risk-taking incentives, and inappropriate performance targets. The text also discusses the significance of accounting profit and ratio performance measures in CEO compensation, as well as the role of economic profit as a value-based measure. Additionally, it addresses the banking bonus culture and its connection to the financial crisis, offering recommendations for enhancing executive bonus plans through effective performance measures, benchmarks, and pay systems. [Extracted from the article]

The article discusses the legacy of Michael Jensen and Kevin Murphy in the field of executive pay, focusing on their proposals for better bonus plans and a wealth-based measure of incentive strength. It highlights two exemplary bonus plans at Expeditors International and Walt Disney, analyzing their effectiveness and shortcomings. The article also delves into the development of a new Stern Stewart bonus plan design and the challenges faced in implementing measures of incentive strength. Overall, the text provides a critical examination of executive pay practices and the impact of different bonus plan designs on corporate performance. [Extracted from the article]

The article "CEO incentives—It's not how much you pay, but how" challenges the common belief about executive compensation, emphasizing the importance of pay structure over pay levels. The study shows that CEO pay has only recently reached levels from 50 years ago and that compensation is less variable than thought. It stresses the need for pay-for-performance systems to attract skilled executives and improve company performance, advocating for aligning executive incentives with shareholder interests. The text also discusses the importance of CEOs owning company stock, providing significant rewards for exceptional performance, and the impact of public disclosure on executive pay. It concludes by addressing the brain drain in the corporate sector due to inadequate compensation systems and the necessity for better incentives to attract top talent. [Extracted from the article]

Extant literature highlights the significance of the corporate governance (CG) mechanism in mitigating agency conflict. Literature also confirms the instrumentality of the board structure (measured as size, diversity, independence and CEO duality) in overcoming the agency problem. In this context, the present study examines the impact of board structure on a firm's cash holding (CH) levels. Likewise, the study tests the role of cash‐holding (CH) in the association between board structure and a firm's performance. Secondary data from 262 PSX‐listed manufacturing and servicing sector firms have been taken for analysis. Panel regression and Generalized Methods of Movement (GMM) were employed to test the modelled relationships. Results show that most of the CG variables, that is, CEO duality, board size, executive compensation, and diversity, do not affect a firm's CH levels in the service and manufacturing sectors. However, the results display a negative and significant impact of block holders (BH), measured as the ratio of the top five shareholders, on cash holding in manufacturing. Likewise, the sector‐wise analysis shows that cash holding significantly mediates between board size and ROA. In contrast, its role between other dimensions of CG and RoA was insignificant. The findings also revealed that firms with frailer CG structures tend to have less CH and can be prone to external environmental risk. [ABSTRACT FROM AUTHOR]

Purpose: Given the serious question raised by the subprime of the 2008 global financial crisis over the rising practices of excessive rewarding of executives in the USA and European firms, the executive pay-performance nexus has emerged as a popular topic of debate in the contemporary corporate finance research. Conducted mostly on the Anglo-Saxon contexts, research outcomes have been inconclusive and dichotomous. Considering this backdrop, this study aims to investigate the endogenous relationship between executive compensation and risk taking in the context of the USA. Design/methodology/approach: Using a large sample of non-financial firms from 2010 to 2020 based on panel data and two-stage least square regression. In this study, the riskier corporate decision is measured as book leverage and ratio of R&D expense to total assets. Chief executive officers' (CEO) experience and age are used as instrumental variables, and these are expected to influence compensation incentives and, hence, affect firm riskiness indirectly. Firm size, return on assets and CEO turnover are reported to affect compensation and corporate decisions, therefore, included as control variables. Given that higher executive compensation is related to riskier corporate decision in firms, this study incorporates total wealth (i.e. accumulated equity related compensation) as an additional proxy of compensation, and this selection is justifiable by the perfect contracting notion of the agency theory. Findings: The results of this study show a significant positive and increasing nexus among compensation and riskier corporate decisions. Besides, the compensation level proxied through the percentage of each form of compensation in total compensation is very important as greater equity and greater salary diminishes risk taking. Practical implications: The outcomes of this study have useful implications for firm stakeholders and policymakers. Originality/value: The level of pay measured by the percentage of each type of compensation in total compensation is of utmost importance as it can increase or decrease risk taking in corporate decisions. [ABSTRACT FROM AUTHOR]

This study examines the relationship between corporate ESG ratings and green innovation based on data from Chinese A‐share listed companies for the period between 2011 and 2022. The findings suggest a "U"‐ shaped relationship between ESG ratings and green innovation. Companies with lower ESG ratings (referred to as "bad" companies) tend to focus on improving their corporate governance and operational conditions, often at the expense of green innovation. However, as companies improve their ESG ratings, they increasingly view green innovation as a key growth area. This relationship is particularly evident in companies with low profitability and high operational risks. Additionally, we explore the impact of corporate ESG ratings on different types of green patents. The study finds that "bad" companies can mitigate the negative impact on green innovation through collaborative efforts, while non‐inventive green innovations, they benefit from independent research and development. Furthermore, the study examines the role of government subsidies and executive compensation in influencing this relationship. The results show that government subsidies can both positively and negatively affect green innovation, depending on the company's operational status and ESG rating. The results provide valuable insights for companies, investors, and policymakers regarding the significant role of ESG scores in promoting green innovation and suggest strategies to enhance corporate sustainability performance. [ABSTRACT FROM AUTHOR]

Firms must allocate resources effectively to cope with uncertainty, which can manifest as a disruption and an opportunity. Although information technology (IT) is a means to cope with uncertainty, chief executive officers (CEOs) may not always support IT investments due to the risky nature of IT, especially when facing uncertain conditions. While prior research suggests that CEO long-term compensation positively incentivizes IT investments, little is known about how different loci of uncertainty impact this relationship. To address this research gap, we study how firm-specific uncertainty and competitive uncertainty shape the influence of CEO long-term compensation on a firm's IT capital investment. Drawing on agency theory and prospect theory, we develop two hypotheses. First, we hypothesize that firm-specific uncertainty and competitive uncertainty positively moderate the influence of CEO long-term compensation on firm IT capital investment. Second, we hypothesize that competitive uncertainty has a stronger positive moderating effect than firm-specific uncertainty on the influence of CEO long-term compensation on firm IT capital investment. Our analysis of secondary longitudinal data from 2000 to 2007 of 357 public firms in the United States supports our hypotheses. In exploratory analyses, we found that CEO long-term compensation results in a higher riskoriented dominant logic in the firm, particularly in conditions of firm-specific uncertainty and competitive uncertainty, with competitive uncertainty having a stronger positive moderating effect. These findings uncover risk-oriented dominant logic as a theoretical mechanism that explains how CEO long-term compensation positively influences firm IT capital investment in uncertain conditions. We also conducted exploratory analyses using a different secondary dataset of 286 U.S. public firms from 2004 to 2019 to consider firm investments in transformative IT applications and found support for our theory. This finding triangulates our results across different time periods and different types of IT investments. This study contributes to theory and practice by providing a nuanced understanding of boundary conditions surrounding CEO long-term compensation, and decisions CEOs make vis-à-vis IT capital investments. [ABSTRACT FROM AUTHOR]

This paper aims to find an answer to the questions of "whether chief executive officers (CEOs) are compensated for market risk", and "how the combined interaction of board size and CEO duality moderates this relationship" from the tenets of agency theory and managerial power theory. Even though the contracting view of agency theory posits that agents are neither to be punished nor rewarded for events that go beyond their direct control (market risk), the research findings in the corporate governance domain are contradictory. It was found that Chinese and American executives were paid for market risk, including oil prices and exchange rates, which was explained by retention risk and weaker corporate governance systems. To shed light on previous inconclusive research, this paper investigates the topic further in a new country setting, that of Switzerland, because the previous results were mostly related to Anglo-Saxon countries. Switzerland is also one of the exemplary countries for executive compensation. Furthermore, it investigates the combined (cascaded) interaction effects of the board size and CEO duality on CEO compensation and market risk from the perspective of managerial power theory, which has not been previously analyzed in the literature to date. For the direct effect, in contrast to previous findings in Anglo-Saxon countries, it has been found that CEOs were not paid for market risk in Switzerland, which confirms agency theory's contracting prediction. This finding outlines the future comparative research area in this domain. For the combined interaction effect, it has been found that board size incorporated with CEO duality is the significant cascaded moderator, and large boards with CEO duality are significantly more effective in controlling asymmetric compensation, which confirms the efficacy of large boards with CEO duality in coping with asymmetric compensation and managerial entrenchment (managerial power theory). These results have both practical and academic implications for boards of directors, Human Resources and corporate governance literature, agency theory, and managerial power theory, by providing further evidence on previous inconclusive findings on board size, CEO duality, and the role of market risk in the CEO pay structure. [ABSTRACT FROM AUTHOR]

How does the complexity of executive compensation contracts affect firm performance? With unknown consequences, the compensation complexity of executives has been rising. We define and measure executive compensation complexity and relate it to accounting; market; and environmental, social, and governance metrics of firm performance. Chief executive officer (CEO) compensation complexity negatively affects all three types of firm performance. We explore theoretical explanations for this relationship and find that cognitively complex CEOs can better deal with complex contracts. The negative complexity effects disappear if firms use only financial goals. Complexity is more harmful in unstable and munificent industries. Complexity also mitigates the negative effect of CEO tenure on long-term performance. In addition, firm performance suffers if the top management team members have heterogeneously complex contracts. Robustness checks support these findings. We conclude that the trend of adding more metrics to executive compensation contracts is not a generally preferable solution to the new and more intense agency problems that firms encounter. [ABSTRACT FROM AUTHOR]

This study examines the association between dispersion in pay‐performance sensitivities (PPS) among top management team (TMT) members and managerial efficiency. While prior research has focused on managerial efficiency as an innate characteristic of managers, this study explores how managerial incentive dispersion shapes managerial efficiency. Using a sample of US firms from 1993 to 2019, we find a negative relationship between TMT incentive dispersion and managerial efficiency, suggesting that higher levels of incentive dispersion can potentially affect managerial efficiency by reducing coordination and cooperation among TMT members. We employ a range of robustness tests and find consistent and robust results. Overall, this study contributes to the literature on executive compensation by providing novel insights into the implications of incentive dispersion among executives for managerial efficiency. [ABSTRACT FROM AUTHOR]

CEO pay structure critically impacts a wide range of strategic choices, including corporate social irresponsibility (CSI), a pervasive and seriously damaging behavior. While the impact of CEO pay structure on CSI has received attention and focus, existing studies need to pay more attention to the potential role of CEO relative pay structure. Based on the behavioral agency theory, this study examines the impact of CEO underpayment and overpayment on CSI. Using panel data on listed companies in China from 2008 to 2019, we find that relative CEO underpayment is significantly positively correlated with CSI, and relative CEO overpayment is significantly negatively correlated with CSI. In addition, we find that industry-level managerial discretion strengthens the positive (negative) relationship between relative CEO underpayment (overpayment) and CSI. [ABSTRACT FROM AUTHOR]

Many firms use relative stock performance to evaluate and incentivize their CEOs. We document that such firms routinely disclose information that harms their peers' stock prices, and sometimes explicitly mention the harmed peers, by name, in these disclosures. Consistent with deliberate sabotage, peer‐harming disclosures appear to be aimed at peers whose stock price depressions are most likely to benefit the disclosing firms' CEOs. The pricing effect of these disclosures does not reverse, suggesting that the disclosures contain legitimate information regarding peers' prospects. In sum, our results suggest that relative performance evaluation in CEO pay motivates CEOs to internalize the externalities of their disclosures, and strategically disclose information that harms peers' stock prices, in order to improve their firms' relative standing within their peer group. [ABSTRACT FROM AUTHOR]

Executive compensation is an important part of the internal governance of commercial banks, and the rationality of the compensation mechanism directly affects the bank’s risk-taking. Based on the panel data of 34 listed small- and medium-sized banks in China from 2012 to 2020, this paper empirically examines the impact and mechanism between executive compensation and the risk-taking level of small- and medium-sized banks. We find that executives’ short-term executive compensation significantly and positively affects the risk-taking level of small- and medium-sized banks, while executives’ long-term executive compensation significantly and negatively affects the risk-taking. Furthermore, considering the specificity of the capital structure of small- and medium-sized banks, we analyse the moderating effect of the capital structure on the above roles and find that there is a partial moderating effect of the capital structure on the relationship between executive short-term compensation and risk-taking in small- and medium-sized banks. This study provides theoretical foundations and countermeasures for improving the executive compensation mechanism and optimising the equity structure to reduce the risk-taking of small- and medium-sized banks and maintain the stability of the financial system. [ABSTRACT FROM AUTHOR]

This paper examines how chief executive officers' (CEOs') prosocial tendency influences corporate policies and firm value. We use individuals' involvement with charitable organizations as a proxy for prosocial tendency. We find that, compared to firms with non-prosocial CEOs, firms with prosocial CEOs have lower executive subordinate turnover, implement more employee-friendly policies, experience higher customer satisfaction, and engage in more socially responsible activities. We also find that firms with prosocial CEOs have higher value and lower risk, partly due to the corporate policies adopted by prosocial CEOs. These results are corroborated when we compare changes in corporate policies and firm value around different types of CEO turnovers: a prosocial CEO replacing a non-prosocial CEO versus other types. Our results thus suggest that prosocial CEOs are more likely to make corporate decisions that benefit others and increase firm value. [ABSTRACT FROM AUTHOR]

Building on prior research showing a positive link between internally generated cash flows and innovation output, we hypothesize and find that the inclusion of cash-flow performance metrics in CEOs' compensation contracts positively impacts firm innovation. Our findings are consistent with the theory that cash-flow metrics incentivize CEOs to make prudent investment decisions, thereby addressing both the overinvestment and the underinvestment challenges for firm innovation. As a result, firms utilizing cash-flow metrics exhibit lower innovation input and higher innovation output compared to firms not employing such metrics. Furthermore, our research indicates that the incentive effect of cash-flow metrics on firm innovation is more pronounced when cash flows convey unique information not reflected in earnings and when CEOs have longer expected employment horizons. This study underscores the effectiveness of cash-flow metrics in motivating management to promote firm innovation. Data Availability: Subscription-based data are obtained from Wharton Research Data Services; public data are obtained from public sources specified in the paper. JEL Classifications: D81, G30, J33, M52. [ABSTRACT FROM AUTHOR]

This research aims to empirically test the influence of corporate social responsibility, capital intensity, and executive compensation on tax avoidance in manufacturing companies in the consumer goods sector listed on the Indonesia Stock Exchange in 2016-2020. This research was conducted using associative quantitative methods. The research population was 54 companies, and a sample of 18 companies was taken using purposive sampling. The research was conducted at consumer goods sector companies on the IDX for 2016-2020. The type of data used is secondary data obtained from www.idx.co.id. Data was collected with the 2016-2020 annual report and analyzed with SPSS version 26. Tax avoidance in this research uses the Effective Tax Ratio (ETR) measurement. The results of hypothesis testing using t statistics show that corporate social responsibility affects tax avoidance. In contrast, capital intensity does not affect tax avoidance, and executive compensation affects tax avoidance. The test results show that corporate social responsibility, capital intensity, and executive compensation affect tax avoidance in manufacturing companies in the consumer goods sector listed on the Indonesia Stock Exchange in 2016-2020.

This research examines how corporate governance moderates the impact of financial derivatives, executive pay, executive traits, and family ownership on tax aggressiveness in manufacturing firms listed on the Indonesia Stock Exchange between 2021 and 2023. Independent commissioners are used as a proxy for corporate governance. A total of 86 companies were included in the study using purposive sampling. The data analysis method employed was moderated regression analysis (MRA). The findings indicated that tax aggressiveness was impacted by financial derivatives, executive compensation, and executive behaviour but not by family ownership. These findings suggest that the level of family ownership does not dictate the degree of tax avoidance. Corporate governance as a moderating factor can influence executive compensation and executive behaviour but does not influence financial derivatives and family ownership concerning tax aggressiveness.

Mandatory disclosure of CEO compensation peers signals potential outside opportunities for the cited CEOs by revealing which companies view them as viable executive candidates. CEOs cited often as compensation peers (especially by larger firms, which represent attractive employment opportunities) are more likely to leave for better positions or receive compensation increases. Equity-based awards following cites by larger firms have shorter vesting periods, suggesting these CEOs gain negotiating power relative to their boards. The disclosure requirement enhanced labor market transparency and led to higher compensation for highly cited CEOs without penalizing less cited CEOs, putting upward pressure on CEO compensation. [ABSTRACT FROM AUTHOR]

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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)