Do incentives work? Option-based compensation and corporate innovation

Biggerstaff, Lee; Blank, Brian; Goldie, Brad

doi:10.1016/j.jcorpfin.2019.06.005

Cited by 54 publications

(14 citation statements)

References 28 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…They would make more margin contributions for their organizations because of the alignment effects. In a word, as a long-term behavior, innovation is affected by financial incentives (Kamoto, 2017; Biggerstaff et al , 2019).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…The correlations between moderating variables and independent variable are not significant. However, many evidences, either principal-agent theory or previous literature (Bessonova and Gonchar, 2017;Biggerstaff et al, 2019), have supported the significant impacts of CEO incentives as crucial extrinsic factors on firm strategic development. Hence, incentives should not be regarded as the direct antecedents of corporate innovation strategy, and our method that the incentives are set as moderators therefore is reasonable.…”

Section: Statistical Descriptionmentioning

confidence: 99%

See 1 more Smart Citation

The impacts of CEO’s knowledge structure on corporate innovation strategy

Qiu

2020

View full text Add to dashboard Cite

Purpose This study aims to explore the impacts of the knowledge structure of CEO on corporate innovation strategy in the background of China’s national policy of innovation-driven development. Design/methodology/approach Regression analysis is used to test the direct effects and the moderating roles of financial and power incentives. It screens 685 listed companies from Chinese stock market, with the time window from 2016 to 2018. Findings CEO’s knowledge breadth has a significant impact on innovation strategy, but the moderating effects of power and financial incentives are not significant. CEO’s knowledge depth is negatively correlated to corporate innovation strategy; moreover, power incentive significantly strengthens the relationship, whereas financial incentive significantly weakens it. Research limitations/implications Firms are suggested to optimize CEO knowledge structure and organizational incentive system for better implementing innovation-driven development strategy. Originality/value It is beneficial to the exploration of the micro-mechanism that enables corporate innovation strategy. Scholars may gain additional insights into the strategic management of corporate innovation from the perspective of CEO’s knowledge structure.

show abstract

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Statistical Descriptionmentioning

confidence: 99%

The impacts of CEO’s knowledge structure on corporate innovation strategy

Qiu

2020

View full text Add to dashboard Cite

show abstract

“…Yet other studies find no evidence that option compensation affects stock return volatility or induces risky financing and investment policies, such as lower cash holdings or higher R&D expenditures (Biggerstaff, Blank & Goldie, 2019, Hayes, Lemmon & Qiu, 2012, thus putting under question the risk-incentivizing property of options. Finally, some studies argue that option compensation induces excessive risk-taking and undue focus on driving stock prices up (Cassidy, 2002, Hall & Murphy, 2003, Madrick, 2003 or choosing inefficient policies, leading, for example, to debt overhang (Dong, Wang & Xie, 2010) or overinvestment in R&D (Shen & Zhang, 2013).…”

Section: Introductionmentioning

confidence: 98%

CEO Compensation Incentives and Playing It Safe: Evidence from FAS 123R

2021

View full text Add to dashboard Cite

Link to publication on Research at Birmingham portal General rightsUnless a licence is specified above, all rights (including copyright and moral rights) in this document are retained by the authors and/or the copyright holders. The express permission of the copyright holder must be obtained for any use of this material other than for purposes permitted by law.• Users may freely distribute the URL that is used to identify this publication.• Users may download and/or print one copy of the publication from the University of Birmingham research portal for the purpose of private study or non-commercial research.• User may use extracts from the document in line with the concept of 'fair dealing' under the Copyright, Designs and Patents Act 1988 (?) • Users may not further distribute the material nor use it for the purposes of commercial gain.Where a licence is displayed above, please note the terms and conditions of the licence govern your use of this document.When citing, please reference the published version. Take down policyWhile the University of Birmingham exercises care and attention in making items available there are rare occasions when an item has been uploaded in error or has been deemed to be commercially or otherwise sensitive.

show abstract

“…In this context, the existing literature considers the board of directors as an important corporate governance mechanism to mitigate the agency conflict and minimize the agency costs by aligning the interest between the two parties. In addition, well-designed equity-based compensation also serves as a key mechanism to be used to align the interest of shareholders and managers (Biggerstaff et al , 2019). Whilst a good stock option scheme can lead to value creation and economic benefits for shareholders, a flawed compensation scheme, on the contrary, can destroy value and detract from overall economic performance (Senbet, 2011).…”

Section: Introductionmentioning

confidence: 99%

Does gender diversity on the board reduce agency cost? Evidence from Pakistan

Amin

Rehman

Ali

et al. 2021

View full text Add to dashboard Cite

Purpose This study aims to examine the effects of board gender diversity on agency costs in non-financial firms listed on the Pakistan Stock Exchange (PSX). Design/methodology/approach Multiple regression analysis is used to determine the impact of board gender diversity on agency cost. The research used panel data consisting of 2,062 firm-year observations of 226 non-financial firms listed on the PSX from 2008 to 2019 to test the proposed hypothesis. In addition, the Blau and the Shannon indices were used to checking for robustness. Findings The results indicate that female presence on the board significantly reduces the agency cost and, hence, mitigates the principal-agent conflict. Moreover, consistent with the critical mass theory, it was found that boards with three or more female directors have a stronger impact on reducing the agency cost, as compared to two or fewer female directors on the board. Research limitations/implications The sample was restricted to non-financial firms listed on the PSX only; therefore, the results reflect the attributes of Pakistan’s business environment. A similar analysis in the context of other countries may generate different results. Practical implications The findings imply that female directors play an important role in reducing agency conflicts between shareholders and managers by enhancing monitoring through effective governance mechanisms. The policymakers, therefore, should focus on female career development and encourage professional training programmes to generate a fair, competitive environment for senior female management. Originality/value This study attempts to fill the literature gap in that no similar study covers the non-financial firms’ listed firms in Pakistan. The paper supports the reforms made by the code of corporate governance by making the placement of female directors mandatory on Pakistani corporate boards. Overall, support is provided for the view that regulators should favour gender quotas regarding the composition of the board management team of listed firms to reduce agency conflicts and gain shareholder confidence.

show abstract

Do incentives work? Option-based compensation and corporate innovation

Cited by 54 publications

References 28 publications

The impacts of CEO’s knowledge structure on corporate innovation strategy

The impacts of CEO’s knowledge structure on corporate innovation strategy

CEO Compensation Incentives and Playing It Safe: Evidence from FAS 123R

Does gender diversity on the board reduce agency cost? Evidence from Pakistan

Contact Info

Product

Resources

About