Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation

Chen, Jie; Song, Wei; Goergen, Marc

doi:10.1016/j.jcorpfin.2019.04.004

Cited by 8 publications

(10 citation statements)

References 91 publications

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“…Thus, satisfied shareholders recommend lucrative compensation package for CEOs. The positive relation between dividends and compensation confirms the findings of Chen et al (2019). Growth opportunities, measured as market-to-book ratio, are statistically significant and positively related to CEO compensation in automobile, chemical and miscellaneous sectors.…”

Section: Discussionsupporting

confidence: 78%

“…Dividend signals quality of future cash flow. Dividend is measured as ratio of total dividend to outstanding common stocks (Chen et al , 2019). Leverage is measured as ratio of total labilities to total assets (Garanina and Kaikova, 2016; Sheikh and Wang, 2012, 2011; Garanina and Kaikova, 2016; Liu et al , 2020).…”

Section: Sample Data Variables and Methodologymentioning

confidence: 99%

“…For instance, Alves et al (2016) observed that dividend yield is positively linked to higher levels of CEO pay. Moreover, Chen et al (2019) have shown a positive association between compensation and different measures of dividend. Wu and Wu (2020) found that the relationship between payout and compensation depends on the structure of compensation.…”

Section: Literature Reviewmentioning

confidence: 96%

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Determinants of CEO compensation: evidence from Pakistan

Khursheed

Sheikh

2022

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Purpose The purpose of this paper is to investigate the impact of firm-specific (i.e. firm size, profitability, leverage, dividend, growth opportunities, management quality and firm age) and country-specific (i.e., gross domestic product [GDP] growth) variables on compensation/remuneration offered to chief executive officers (CEOs) working in different industries of Pakistan. Design/methodology/approach Panel data techniques, namely, pooled ordinary least squares, fixed effects and random effects methods are used to estimate the results. Moreover, Hausman test is used to choose which estimation method, either fixed effects or random effects, is better to explain the results. Findings Firm size, profitability, leverage, growth opportunities and age are some important firm-specific factors that have mixed (i.e. positive/negative) impact on CEO compensation in different industries. Variations in results are due to industry dynamics. However, it is important to mention that three key variables, namely, dividend, management quality and GDP growth have shown consistent positive impact on CEO compensation in most of the industries. In sum, results show that firm-specific and country-specific variables have material effects on CEO compensation. Moreover, results are found consistent with the predictions of agency theory and human capital theory. Practical implications The authors are sure that findings of this study provide some support to the board of directors to determine the pay slice for CEOs. Moreover, findings provide support to the regulatory authorities in formulating mechanisms to determine the compensation package for CEOs working in different industries and to improve the Code of Corporate Governance. Originality/value To the best of the authors’ knowledge, no empirical study in Pakistan has yet estimated the effects of firm-specific and country-specific variables on compensation offered to CEOs working in different industries. Thus, industry-wise analysis provides some new insights to the decision-makers and lays some foundation upon which a more detail analysis could be based.

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Section: Discussionsupporting

confidence: 78%

Section: Sample Data Variables and Methodologymentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 96%

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Determinants of CEO compensation: evidence from Pakistan

Khursheed

Sheikh

2022

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“…Additionally, we included a dummy variable, lone‐founder CEO , that equaled 1 if the CEO was the founder of the firm and the only family member active in management or on the board, meaning that no other family members exercised strategic control over CEO compensation (e.g., He, 2008). We also controlled for dividend payout using dividends per share , because recent research has uncovered a link between a firm's dividend policy and CEO compensation (Chen et al, 2019). Furthermore, we controlled for the influence of firm risk on CEO pay–performance sensitivity (e.g., Combs et al, 2010).…”

Section: Methods and Resultsmentioning

confidence: 99%

It's a family affair: How social identification influences family CEO compensation

Mueller

Flickinger

2021

Corporate Governance

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Research Question/Issue This study analyzes the heterogeneity of CEO compensation in family firms. Specifically, we investigate the relationship between a family CEO's social identification with the family firm and the level of her or his compensation. Research Findings/Insights Using a sample of S&P 500 family firms between 2006 and 2014, we find that levels of social identification among family CEOs explain the heterogeneous patterns of CEO compensation among family firms. Our results show that the level of social identification varies among family CEOs. Theoretical/Academic Implications Our findings indicate that differences in social identification among individual family executives are an important factor in CEO compensation in family firms. This factor has been overlooked in the literature, which has instead focused on the explanatory power of faultlines between family versus non‐family firms or family versus non‐family executives in family firms. Practitioner/Policy Implications Practitioners may value our finding that socio‐psychological dynamics influence strategic decision‐making in family firms, such as setting the compensation of the family CEO. In particular, practitioners should be aware of each family CEO's level of identification and should not assume that all family members equally socially identify with the family firm.

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“…In words of Black (1976) "the harder we look at the dividend picture, the more it seems like a puzzle, with the pieces that just do not fit together". Dividend is one of the controversial topics of study as different researchers have different point of view like: Dividend policy is affected by executive stock option holdings & stock options (De Cesari & Ozkan, 2015), growth opportunities (Flavin & O'Connor, 2017), creditor rights & culture (Byrne & O'Connor, 2017), bank risk taking (Onali, 2014), new CEO compensation (Chen et al, 2019), restricted monetary policies (Pandey & Bhat, 2007), corporate social responsibilities (Cheung et al, 2018), leverage (Cooper & Lambertides, 2018), family control, tangibility& firm size (Yousaf et al, 2019), Institutional ownership & board composition (Abdelsalam et al, 2008), profitability (Renneboog & Trojanowski, 2007) and many more variables. Lintner (1956) proposed that dividend depends upon current earnings and lagged dividend of firms.…”

Section: Introductionmentioning

confidence: 99%

Dividend Policy: A Bibliometric Analysis

2022

IJFB

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The dividend is one of the controversial topics in Financial Management which mean earnings of management how much amount is distributed to the shareholders and what percentage is retained in the business. The main objective of the study is to provide a comprehensive overview of previous studies related to the topic of Dividend Policy in the context of statistical analysis of published articles/documents around the world. For this purpose, Bibliometric Analysis was conducted through the Bibliometrix library and the Biblio-Shiny platform of RStudio. The web of Science database was used for the collection of data on the topic of Dividend Policy. The search was made in the web of science database with the keywords “The dividend policy”, “Dividend payouts”, “Determinants” and “Lintner model” covering the period of 20 years from 2002 to 2022. The publications/documents/articles included in the study were written by 839 authors from all over the world. The Bibliometric Analysis of the collected data indicates that the Dividend Policy has a significant contribution to scientific production. In 2011, there was a great increment in the number of publications and since 2018 the publications are continuously increasing. USA, UK and China are the pre-eminent countries having significant contributions to research on Dividend Policy.

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Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation

Cited by 8 publications

References 91 publications

Determinants of CEO compensation: evidence from Pakistan

Determinants of CEO compensation: evidence from Pakistan

It's a family affair: How social identification influences family CEO compensation

Dividend Policy: A Bibliometric Analysis

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