Pay me a single figure! Assessing the impact of single figure regulation on CEO pay

Ibrahim, Salma; Li, Hao; Yan, Yan; Zhao, Jinsha

doi:10.1016/j.irfa.2020.101647

Cited by 9 publications

(5 citation statements)

References 67 publications

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“…The findings support the theoretical proposition of agency theory that performance should be used as a positive driver of CEO pay to align the managers' and shareholders' interests (Al‐Shammari, 2021; Amewu & Alagidede, 2021; Dang et al, 2021; Hu & Xu, 2021; Jensen & Meckling, 1976; Ko et al, 2020; Yang et al, 2020; Zoghlami, 2021). This finding equally confirms the research outputs of extant studies such as Chen et al (2021), Bouteska and Mefteh‐Wali (2021), Singh et al (2021), Al‐Faryan (2021), Ibrahim et al (2021), and Bhuyan et al (2020) which affirm the theoretical propositions of the classical agency theory. It, however, contradicts the research outcomes of some other studies such as Olaniyi and Obembe (2015, 2017), Duffhues and Kabir (2008), Aduda (2011), and Faria et al (2014) which supports the theoretical stand of managerial power theory that posits CEO pay to be a factor that aggravates agency problem rather than scaling it down (Bebchuk et al, 2011; Bebchuk & Fried, 2003).…”

Section: Presentation and Discussion Of Empirical Findingssupporting

confidence: 84%

Do institutional framework and its threshold matter in the sensitivity of CEO pay to firm performance? Fresh insights from an emerging market economy

Olaniyi

Young

et al. 2022

Manage Decis Econ

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This study examines the role of institutional quality and its threshold in the sensitivity of CEO pay to firm performance in an emerging market economy, using a generalized method of moments, Driscoll and Kraay's nonparametric covariance matrix estimator, and robust dynamic panel threshold. Bureaucratic quality and corruption control weaken performance‐based pay for CEOs, while law and order strengthen it. The overall institutions allow boardroom backscratching which biases executive compensation contracts. The study shows that the country operates below the institutional quality threshold values required to spur performance‐based pay for CEOs. The study concludes that institutions matter in CEO pay‐firm performance nexus.

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Section: Presentation and Discussion Of Empirical Findingssupporting

confidence: 84%

Do institutional framework and its threshold matter in the sensitivity of CEO pay to firm performance? Fresh insights from an emerging market economy

Olaniyi

Young

et al. 2022

Manage Decis Econ

View full text Add to dashboard Cite

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“…Shareholder proposals urging disclosure and reduction of CEO-to-worker pay ratios are becoming more common [51]. CEO-to-median salary ratios are also being incorporated into ESG rating frameworks as a reflection of how a company shares value with its workforce [52,53]. Excessive executive payouts may crowd out other sustainability investments.…”

Section: Pay Equitymentioning

confidence: 99%

Sustainable Human Capital Management, ESG, and Firm Performance: Moderating Role of ESG Disclosure

Jorgji,

Teta,

Mousa

et al. 2024

J. Hum. Earth Future

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This study investigates the relationships between sustainable human capital management practices, ESG performance, ESG disclosure, and firm financial performance. Using a sample of 387 S&P 500 firms from 2013 to 2023 and a panel data regression approach, we examine the impact of training expenditure, workforce diversity and inclusion, pay equity, and employee benefits on ESG performance. We also explore the association between ESG performance and ESG disclosure, the effect of ESG performance on financial performance, and the moderating role of ESG disclosure in the ESG-financial performance relationship. Our findings reveal that sustainable human capital management practices have a positive and significant impact on ESG performance, which in turn positively influences firm financial performance. We also find a positive relationship between ESG performance and ESG disclosure, and that ESG disclosure moderates the ESG-financial performance link, with the positive association being stronger for firms with higher levels of ESG disclosure. This study contributes to the literature by offering an integrated approach to examine the relationships between sustainable human capital management, ESG performance, ESG disclosure, and financial performance, providing novel insights into the drivers and outcomes of corporate sustainability in the context of human capital management. Doi: 10.28991/HEF-2024-05-02-08 Full Text: PDF

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“…In contrast, a study of Mohan and Ruggiero (2007) shows that gender plays a role in the level of CEO pay and women are under‐compensated. However, prior empirical studies have failed to take account of the moderating effect of gender in the context of SOP votes (e.g., Bao et al, 2020; Boone et al, 2020; Crawford et al, 2020; Ibrahim et al, 2021 and Norman et al, 2020). Thus, the following hypothesis is designedHypothesis The presence of a female CEO increases the effectiveness of SOP in curtailing pay ratio .…”

Section: Hypotheses Developmentmentioning

confidence: 99%

The moderating effects of CEO power and personal traits on say‐on‐pay effectiveness: Insights from the Anglo‐Saxon economies

2022

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This study investigates the efficacy of say-on-pay (SOP) regulation in mitigating excessive CEO compensation and how it is affected by CEO personal traits and the power distribution inside a corporation. Using IV-GMM method and a sample of 1,931 firms from Australia, Canada, the UK, and the USA, we find that shareholder voices are successful in reducing the pay gap between CEOs and the median employee, regardless of the exact nature of the regulation. In addition, older CEOs are associated with lower pay ratios and there are some evidences suggesting that older or female CEOs enhance SOP effectiveness.Further, power distribution manifested through corporate governance mechanisms matters, as increasing board size and director and audit committee independence reduce pay ratio. A measure of CEO power, CEO pay slice, has a significant and large positive explanatory power for the model and its exclusion can greatly exaggerate the estimated impact of SOP on pay ratio. Another measure of CEO power, CEO duality, appears to enhance the potency of SOP slightly. There is also some evidence indicating that ownership concentration enhances SOP effectiveness. Our findings have implications for companies, investors, and regulators concerning the importance of power balance structure within corporations.

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Pay me a single figure! Assessing the impact of single figure regulation on CEO pay

Cited by 9 publications

References 67 publications

Do institutional framework and its threshold matter in the sensitivity of CEO pay to firm performance? Fresh insights from an emerging market economy

Do institutional framework and its threshold matter in the sensitivity of CEO pay to firm performance? Fresh insights from an emerging market economy

Sustainable Human Capital Management, ESG, and Firm Performance: Moderating Role of ESG Disclosure

The moderating effects of CEO power and personal traits on say‐on‐pay effectiveness: Insights from the Anglo‐Saxon economies

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