Governance and Incentives: Is It Really All about the Money?

Till, Robert E.; Yount, Mary Beth

doi:10.1007/s10551-018-3778-5

Cited by 12 publications

(10 citation statements)

References 45 publications

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“…Stewarship theory is based on philosophical hypothesis of human nature, in essence, humans can trust, act responsibly, be honest and honest with others. This is implicated in the desired trust by shareholders (Cater et al, 2019;Chrisman, 2019;Pacheco, 2019;Till & Yount, 2019). In other words, the theory of stewardship considers management to be confident in acting best for general public interests and in particular for investors.…”

Section: Stewardship Theory and Agency Theorymentioning

confidence: 99%

Impact Financial Performance to Stock Prices: Evidence From Indonesia

Prasetyo¹,

Aliyyah²,

Rusdiyanto³

et al. 2021

Preprint

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The authors propose in this study to evaluate financial performance applications for stock prices of the Indonesian Stock Exchange in manufacturing companies. The method of research used here is a quantitative descriptive method. In that statement, Indonesian Stock Exchange manufacturing companies between 2016 and 2018 are the population use in this research, using the sampling technique Purpose Sampling. This research uses secondary data from 2016 to 2018, the financial reports of Indonesian Stock Exchange manufacturing companies. The Indonesian stock exchange web site has been provided with all data sources at https://www.idx.co.id, and searching for www.google.id. Our analysis shows that book value prices and the net profit margin affect stock prices. The value of financial performance at the Indonesian Stock Bourses manufacturing companies' cost amounts to 64.5 percent, while other factors not listed in this study account for 35.4 percent.

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Section: Stewardship Theory and Agency Theorymentioning

confidence: 99%

Impact Financial Performance to Stock Prices: Evidence From Indonesia

Prasetyo¹,

Aliyyah²,

Rusdiyanto³

et al. 2021

Preprint

View full text Add to dashboard Cite

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“…As employees (i.e., agents) do not bear the full wealth effects of their decisions, employees' risk orientation may not be perfectly aligned with that of the firm owners (i.e., principals). For example, overinflated equity compensation practices and a one-sided emphasis on yield may cause employees to incur unsustainably high debt levels (i.e., creating a malfunctioning incentive contract), resulting in principal-agent conflicts (Jensen and Meckling 1976;Till and Yount 2019). Firms minimize these conflicts through corporate policy and risk governance.…”

Section: Beyond the Principal-agent Contract: An Organizational Setting With Social Normsmentioning

confidence: 99%

“…Recent research is challenging the notion that employees are narrowly self-interested (Till and Yount 2019); instead, employees care for the proceeds generated for needy others, in addition to their own (Berg and Gigerenzer 2010). By sticking to social norms and displaying generally respected modes of conduct, people view themselves favorably: they are altruistic, generous, and helpful (Tonin and Vlassopoulos 2013).…”

Section: Beyond the Principal-agent Contract: An Organizational Setting With Social Normsmentioning

confidence: 99%

The gift that keeps on giving: corporate giving and excessive risk-taking

2021

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Corporations have recently started incorporating employees’ prosocial preferences into their incentive schemes, including charitable donations (corporate giving). These donations are mainly discussed in conjunction with the external effects of a firm’s CSR strategy. However, this experiment examines the effect of donations on internal firm operations. Specifically, we investigate whether the presence and structure of corporate giving influences employees’ excessive risk-taking. Such prosocial activities may remediate misaligned incentives often cited as drivers for employees to take excessive risks. Contrary to widespread practice, our experimental evidence suggests that firms could constrain employees' excessive risk-taking by linking existing contributions to project rather than corporate performance, thus providing boundaries around an employee’s involvement in CSR initiatives. We identify project-level giving as an unexplored CSR benefit and infer that personal responsibility effectively changes an employee’s incentive package. Our findings suggest an inverted U-shape curve of effectiveness.

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“…Managers' preferences for risk can differ from the levels of risk that are optimal for shareholders, as managers may tend to make decisions that maximise their Director remuneration and performance career horizons (Chari et al, 2019). Although agency theory has recently been criticised for its limited consideration of the motivations of managers (Till and Yount, 2018), the economic interests of managers are an important consideration for the design of executive remuneration.…”

Section: Theory and Literaturementioning

confidence: 99%

Executive director remuneration and company performance: panel evidence from South Africa for the years following King III

Padia

Callaghan

2020

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PurposeIn the wake of certain corporate scandals, many stakeholders are questioning if current high levels of executive remuneration, world-wide, are in fact related to company performance. After the implementation of King III in 2010, there has been an expectation that governance has improved in South African companies. If so, empirical testing should find executive remuneration to be positively related to forms of performance that reflect an increase in company value, like Tobin's Q, or return on assets, rather than measures such as total revenue.Design/methodology/approachAgency theory predicts that if executive remuneration is not carefully designed to maximise the value of the company, executive directors will tend to maximise revenue instead. To test this prediction, hand-collected panel data from Johannesburg Stock Exchange company reports are linked to company performance data to test this prediction, across the years 2010–2017, post King III.FindingsResults challenge certain important assumptions. Generalised method of moments tests find total revenue, rather than value added measures of performance such as Tobin's Q or return on assets, to predict executive director remuneration. This is notwithstanding the significance of Tobin's Q in testing based on ordinary least squares. Implications of these findings for the field are derived and discussed.Originality/valueUnique findings suggest that complacency about the relationships between executive director compensation and company performance is unwarranted. In light of a decline in the country's international rankings on the quality of its corporate governance, a renewed focus on the effectiveness of human resource compensation strategy may be necessary in this context.

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Governance and Incentives: Is It Really All about the Money?

Cited by 12 publications

References 45 publications

Impact Financial Performance to Stock Prices: Evidence From Indonesia

Impact Financial Performance to Stock Prices: Evidence From Indonesia

The gift that keeps on giving: corporate giving and excessive risk-taking

Executive director remuneration and company performance: panel evidence from South Africa for the years following King III

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