Executive compensation in family firms: The effect of multiple family members

Cheng, Minying; Lin, Bingxuan; Wei, Mingdong

doi:10.1016/j.jcorpfin.2014.10.014

Cited by 71 publications

(65 citation statements)

References 93 publications

(110 reference statements)

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“…Reiterating the same, Michiels, Voordeckers, Lybaert and Steijvers (2013) found stronger pay–performance sensitivity for non-family CEOs rather than for family CEOs. Studying the impact of family ownership on executive pay contracts in a sample of listed family firms in China, Cheng, Lin and Wei (2015) established that increase in family members’ ownership positively affects executive pay, thereby negatively moderating the sensitivity of compensation to firm performance. Further, the geographical proximity of institutional investors was associated with their active role which resulted in performance-driven pay in a study conducted by Mazur and Salganik-Shoshan (2017) using a sample of US firms over the period from 1992 to 2006.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Impact of Ownership Type and Board Characteristics on the Pay–Performance Relationship: Evidence from India

Kohli¹

2018

Indian Journal of Corporate Governance

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The present research has been undertaken to study the role of ownership type and board mechanisms in moderating the executive pay-corporate performance linkage in the Indian context. A sample of 209 companies listed on the S&P BSE 500 Index has been studied over the period 2008-2009 to 2012-2013. Rigorous statistical analysis of the panel data highlights that some of the governance mechanisms are, in practice, instrumental in improving the relationship between pay and performance. Whereas efforts must, indeed, be channelled towards the better functioning of certain other internal control mechanisms. Specifically, of noteworthy consequence is the difference in the way the shareholders and the board of directors ameliorate the pay-performance relationship with respect to accounting vis-à-vis marketbased corporate performance. Further, the weak monitoring role discharged by the institutional investors warrant immediate policy concern. The study brings forth important implications for practitioners and policy makers in designing corporate performance-based pay keeping in view the predominant influence exerted by the institutional environment of the emerging economy of India.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Impact of Ownership Type and Board Characteristics on the Pay–Performance Relationship: Evidence from India

Kohli¹

2018

Indian Journal of Corporate Governance

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“…For example, Hartzell and Starks () find that institutional ownership is related to higher performance‐based compensation and lower overall levels of compensation. More recent work explores the effects of family ownership on executive compensation and how resultant agency issues lower pay‐for‐performance sensitivities (Cheng, Lin, & Wei, ). We show that state ownership, which continues to be prevalent in some of the largest international firms, is linked to different compensation structures based on characteristics specific to government owners.…”

Section: Introductionmentioning

confidence: 99%

CEO compensation and government ownership

Borisova

Salas

Zagorchev

2018

Corporate Governance

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Research Question/Issue: Despite the benefits of privatization (i.e., divestiture of government-owned enterprises), governments still own substantial stakes in economically important firms. Given public concern about excessive compensation and frequent government responses, this paper compares the level and structure of CEO compensation in privatized firms, including those still partially owned by governments, to firms never owned by the government.Research Findings/Insights: Using a multinational sample of firms, we find that privatized firms have lower total CEO compensation than private firms never owned by governments. CEO equity-linked wealth in privatized firms is less sensitive to stock performance, and equity compensation is negatively related to government ownership stakes. Privatized companies engage in less risk-taking than nonprivatized companies, suggesting that government risk aversion could explain differences in CEO compensation.Theoretical/Academic Implications: This study finds that the role government ownership plays in the level and structure of executive compensation is broadly consistent with pay regulations governments periodically impose. It provides empirical support for the argument that government owners are risk-averse and associated with lower equity-linked executive pay, which discourages CEO risk-taking.Practitioner/Policy Implications: This study encourages corporate boards to consider the degree of government involvement in their firms when setting CEO compensation packages and policies. Government concerns about excessive compensation may require boards to find other ways to incentivize CEOs, particularly given the weaker governance linked to state-influenced firms. Additionally, governments should analyze their influences on CEO compensation, and how these can affect performance, when considering their ownership stakes in public companies.

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“…Sakawa & Watanabel, 2008). However, the focus of such research was on the dispersion of ownership (Jones & Mygind, 2011), institutional ownership (Victoravich, Xu & Gan, 2012), family ownership (Cheng, Lin & Wei, 2015) or employee ownership (Jones & Mygind, 2011) and its impact on aspects of remuneration. Research on the impact of the foreign ownership on executive remuneration is very scarce.…”

Section: Determinants Of Top Management Remunerationmentioning

confidence: 99%

Executive compensation in family firms: The effect of multiple family members

Cited by 71 publications

References 93 publications

Impact of Ownership Type and Board Characteristics on the Pay–Performance Relationship: Evidence from India

Impact of Ownership Type and Board Characteristics on the Pay–Performance Relationship: Evidence from India

CEO compensation and government ownership

Top management remuneration in a post-transition economy: Does company ownership make a difference?

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