The Ethics of Managerial Compensation: The Case of Executive Stock Options

This paper examines the ethics of contemporary managerial compensation in the context of executive stock options. Economic considerations would dictate that executive stock options should be adjusted to eliminate the effect of overall stock market movements which are beyond the control of the executive. However, in practice, most executive stock options are not adjusted to control for these outside factors. Agency considerations are the most likely culprit. Adjusting for the influence of outside factors, such as a generally rising stock market, from executive stock options sets a higher bar for managers to reach. Furthermore, traditional accounting standards permitted firms that did not adjust options to avoid reporting options as expenses. This presents CEOs and boards of directors with a major ethical dilemma. On the one hand, their duty to their shareholders and stakeholders dictates that executive stock options should be adjusted to eliminate outside noise from unrelated movements in the overall stock market. However, financial statements are presented in the language of accounting. If the overwhelming majority of the users of a language define a particular item in one way, then to deviate from the norm implies that the recipient of such a deviant statement may not properly interpret the statement. Likewise, if the standard practice is for firms to use unadjusted options and thus under-report expenses, to deviate from this industry norm risks that users of financial statements would not properly interpret the financial statements, with perhaps negative consequences for the shareholders. In short, if “everyone else does it,” then it could be wrong for an individual firm to deviate from the norm as that would harm the shareholders. James J. Angel is an Associate Professor of Finance at the McDonough School of Business at Georgetown University. He is a financial expert whose research focuses on the operation of financial markets in the United States and other countries. He currently serves on the OTCBB Advisory Board, and he has served as Chair of the Nasdaq Economic Advisory Council. He earned his undergraduate degree from the California Institute of Technology, his MBA from the Harvard Business School, and he earned his Ph.D. in Finance from the University of California at Berkeley. Douglas M. McCabe is a Professor of Management at the McDonough School of Business at Georgetown University. He serves on the Editorial Boards of 20 scholarly journals, including Research on Ethical Issues in Organizations, JAI Press as well as the Employee Responsibilities and Rights Journal. Considered by the media to be an expert in his field, he has appeared more than 200 times on international (CNN), national (ABC, NBC, and CBS), and local television and radio. He holds a Ph.D. from Cornell University and is a member of Phi Beta Kappa.     

职业经理人薪酬实证研究述评

职业经理人薪酬是近年来国内外理论界关注的热点问题.本文对职业经理人薪酬的实证研究进行了全面回顾,并对今后我国职业经理人的薪酬研究作出了展望.     

Salesforce Compensation: An Analytical and Empirical Examination of the Agency Theoretic Approach

Since the papers of Basu et al. (1985) and Lal and Srinivasan (1993), marketing academics have been interested in the design and implementation of optimal compensation plans. The literature has focused on agency theory as a foundation to help describe and understand this process. Although there has been much theoretical work on this topic, empirical evidence to support this theory remains sparse. Studies by Coughlan and Narasimhan (1992) and John and Weitz (1988, 1989) have found some early evidence that supports agency theory.In this paper we revisit the issue of salesforce compensation on both theoretical and empirical fronts. On the theory side we build a game theoretic model of salesforce compensation that accounts for risk aversion on the part of both the principal and the agent. We further show that accounting for the firm size within the analytical framework yields new insights into the nature of compensation design.The results obtained from our model, while substantiating past findings, offer some new insights into the compensation design process. In particular we find that firm demographics play an important role in the design of the optimal compensation scheme. We then use two datasets collected ten years apart by the Dartnell Corporation to investigate and test hypotheses generated by our model and the extant literature. Our results show that the basic tenets of agency theory continue to hold over time and that our new theoretical hypotheses are consistent with the data. Using the two datasets we also find that inter-temporal changes in salesforce compensation coincide with the advent and adoption of new technologies. Our research thus adds to our substantive knowledge of the drivers of salesforce compensation, while adding to the theoretical structure through taking account of the possibility of principal risk aversion.     

控股股东所有权结构、产权性质与高管薪酬决定的掏空效应

本文基于股东间代理问题视角,利用2007~2011年我国A股上市公司数据,实证考察了高管薪酬的过度支付是否会成为控股股东实现控制权私利的一种路径。研究发现：在地方国企中,高管薪酬水平与控股股东的现金流权显著负相关,与控股股东控制权与现金流权的两权分离度显著正相关,但这一结论在央企和民营企业中均不成立。这表明地方国企高管薪酬决定存在明显的掏空效应。本文的研究结论对于深化国企高管薪酬管理制度改革具有政策启示涵义。     

旅行社信用缺失及其控制:基于博弈理论的分析

近几年来,我国一些旅行社存在严重的信用缺失问题。通过利用博弈论的相关知识对旅行社诚信行为选择进行博弈分析,提出了有效抑制旅行社信用缺失的相关措施:引入对监管部门的奖励机制,充分调动监管部门的积极性,激励监管部门积极实施严监管;引入对监管部门的处罚机制,提高旅行社监管部门的责任意识;对失职监管部门加大处罚力度,来保证监管效果的实现;建立健全信用的奖惩机制,加大旅行社的失信成本。     

The Nature of the Firm, Agency Theory and Shareholder Theory: A Critique from Philosophical Anthropology

Standard accounts on the nature of the firm are highly dependent on explanations by Coase, coupled with inputs from agency theory and shareholder theory. This paper carries out their critique in light of personalist and common good postulates. It shows how personalist and common good principles create a framework that not only accommodates business ethics better but also affords a more compelling understanding of business as a whole.Joan Fontrodona is Assistant Professor of Business Ethics and Academic Director of the Center for Business in Society at IESE Business School. He is member of the Academic Board of EABIS and member of the Executive Committee of EBEN-Spain.Alejo José G. Sison is the Rafael Escolá Chair of Professional Ethics (TECNUN) with appointments from the Philosophy Department and the Institute of Enterprise and Humanism of the University of Navarra.     

试论我国股票权证市场的发展模式

我国发展股票权证市场已经势在必行,但是在市场发展模式的选择上仍存在争议.文章从全球视野出发,总结衍生权证与股票期权等市场模式的发展情况和优缺点,并在此基础上,提出了我国股票权证市场应当选择股票期权为主的发展模式等相关建议.     

外贸代理制度的问题与重构

外贸代理制形成于我国外贸体制改革过程,自其产生后就形成了独具特色的内容,并受到行政法与民商法的调整。现行对外贸代理的行政管理模式影响了外贸代理的实际运用,而法律规范间的不融合也导致外贸代理制产生一些理论与实践的问题。外贸代理制度的重构模式,既需要满足法律体系的内在逻辑性要求,也需要满足各方利益均衡的要求。     

CEO cash compensation determinants: an empirical examination of US airlines

This study empirically investigated the determinants of cash compensation for chief executive officers (CEOs) for US airlines in the post-9.11 period. After an analysis of 53 firm-year observations from 2002 to 2004, we found that the airline CEO cash compensation was positively correlated with the size and revenue efficiency of an airline firm whereas growth, debt use, profitability, and stock performance were irrelevant to the compensation. Larger airlines with better revenue-generating ability tended to offer high cash compensation to their CEOs. Our findings suggest that the pay-for-performance principle has yet to be fully implemented in the airlines industry. To minimize agency problems and enhance the firm value of US airlines, CEO compensation should be based not only on revenue efficiency but also on profitability and stock performance.     

Agency costs and the structure and performance of international joint ventures

This article develops a principal-agent contractual model for the issue of the structure and performance of international joint ventures. From this model, hypotheses are generated relating the number of partners in a joint venture and the cross-cultural divergence of the partners with joint venture performance. These hypotheses are empirically assessed using a population of over 3,500 developed-country joint ventures.     

Agency Theory,Reasoning and Culture at Enron: In Search of a Solution

Applying evidence from recently available public information on Enron, I defined Enron’s culture as one rooted in agency theory by asserting that Enron’s members were predominantly agency-reasoning individuals. I then identified conditions present at Enron’s collapse: a strong agency culture with collectively non-compliant norms, a munificent rare-failure environment, and new hires with little business ethics training. Turning to four possible antidotes (selection, objectivist integrity, integrity capacity, and stewardship reasoning) to an agency culture under these conditions, I argued that the currently available ethics literature would have made little difference toward averting Enron’s collapse if any of the recommendations from the relevant ethics literature had been implemented. I conclude by identifying new directions for business ethics literature in order to make it more implementable under the conditions identified at Enron. Essentially, we need a way to clearly determine (1) the difference between connivance and commitment, (2) what is meant by balance with regard to the multiple dimensions of ethics and legal theories, and (3) the proper balance between agency and stewardship reasoning. Brian E. Kulik is a Ph.D. candidate in Management at Washington State University’s School of Business. His work focuses on the prevention of corporate corruption, corporate governance and ethics, teamwork and diversity, and research methods. His research to date has appeared in the Western and National Academy of Management conference proceedings and the journal Organizational Analysis. He earned M.S. degrees from Washington State University and The University of Cincinnati, and M.B.A. from The University of Denver.     

Moral Agency,Profits and the Firm: Economic Revisions to the Friedman Theorem

The paper reconstructs in economic terms Friedman’s theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the “rules of the game,” largely legal ones; and (3) the creation of ethical capital, which allows moral conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm. Dr. Sigmund Wagner-Tsukamoto is researcher in business ethics at the School of Management of the University of Leicester, UK. He holds two doctorates, one in social studies from the University of Oxford, UK, and one in economic studies from the Catholic University of Eichstaett, Germany. He has widely published on green consumerism and institutional economic issues that concern organization theory and business ethics theory. His publications include the books Understanding Green Consumer Behaviour (Routledge, 1997 & 2003) and Human Nature and Organization Theory (Edward Elgar, 2003).     

会计政策变更、信号传递与代理成本

在股权分散的上市公司中,存在着全体股东与经营者之间的单层委托代理关系,而在股权集中的上市公司中,存在着大股东与经营者、中小股东与大股东之间的双重委托代理关系。将会计政策变更作为一个可观测变量,针对股权分散和股权集中的两类上市公司,分别建立单委托、双重委托代理模型,分析降低代理成本、提高公司价值的途径。分析结果表明,在两类上市公司中,将会计政策变更作为一种信号传递机制写入激励合同,可以降低代理成本,提高公司价值。     

On the Influence of China＇s Online Overseas Purchasing Agency and the Countermeasures

近年来，新兴的网络海外代购行业迅猛发展，缺乏监管和规范的海外代购逐渐引起政府相关部门的重视。网络海外代购促进国际间资源的优化配置、丰富了国内百姓的消费选择、带给国内企业积极的竞争环境，但会造成国家税收损失，关税保护能力削弱，网上跨境支付可能引发多种金融风险，对国内相关企业尤其零售企业造成冲击，国内消费者和代购商也面临多种风险。解决对策是：规范行业操作标准及相关规范；构建合理完善的电子商务税收法规体系，构建网络信息时代的外汇监管体系；增强消费者风险防范及维权意识，鼓励行业转型及创新。     

Income and social communication: The demographics of stock market participation

This paper analyses the determinants of stock market participation decisions using officially compiled aggregate stock account opening data in China. Different from the literature that often focuses on one particular dimension, our paper systematically evaluates the relative importance of disposable income, demographic variables, macroeconomic factors, stock market conditions and social communication on both the level and the change of the participation rate. We find that the level of the participation rate is predominately determined by the income factor, followed by various measures of social communication. Social communication plays the most important role in the change of the participation rate, acting as a multiplier to stimulate stock market participation. The effects are more pronounced in high‐income, high‐education, high‐population‐density groups and during the bull market period.     

美元:大国兴衰的原点

本文重点分析战后国际金融秩序对美国国内政治经济的影响,美元关键货币地位与美国为国际经济提供流动性而导致的国际收支赤字,最终导致了国际金融秩序中流动性创造机制的铸币税问题和国际贸易秩序中国际收支调整机制的善意忽略(benign neglect)问题。这些制度性缺陷在三个方面影响了美国:首先,联邦政府把政策自主权放在首位,通过发行大量债务同时为多重政策目标融资,由此产生的美国政府预算赤字和联邦债务是全球流动性过剩的主要来源;其次,美国金融业强调信用创造方面的竞争力,把社会上的各种资产债券化,进行高杠杆放贷,逃避政府监管,这些做法直接造成的变化导致了次贷危机的爆发;最后,受到美元关键货币地位的影响,再加之美国制造业引领全球生产体系的发展,这就造成了以出口为导向的国家和欧佩克成员国为核心的全球储蓄过剩,随着跨国企业大举在海外投资,美国制造业创造就业机会的能力被严重削弱。     

Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy

In a departure from the traditional studies of corporate philanthropy that focus on board composition, advertising, and social networks, the authors investigate the financial correlates of corporate philanthropy. The research design controls for firm size and industry while observing firms from a variety of industries. The sample contains matched pairs of generous and less generous corporate givers. The authors find, as hypothesized, a positive relationship between a firm's cash resources available and cash donations, but no significant relationship between corporate philanthropy and firm financial performance, regardless of whether corporate philanthropy is measured as cash payouts or the aggregate contributions that charities actually receive, and regardless of whether financial performance is gauged using accounting measures or market measures. Whereas the link between available resources and corporate philanthropy is well accepted in the literature on corporate social responsibility, it has been rarely tested and never so definitively found as in this research.     

新形势下省级以食品业务为主的综合检验机构生存和发展

一直以来,食品检验在省级综合检验机构整个业务中占很大比重,随着食品监管行政职能的转变,导致综合检验机构在食品领域的业务量锐减,本文从质检系统本身的管理和外部竞争对手的威胁等方面对此现象进行了分析,并提出相应的调整措施。     

Moral Choice in an Agency Framework: The Search for a Set of Motivational Typologies

Moral choice, as a precursor to behaviour, has an important influence on the success or failure of business entities. According to Rest, 1983, Morality, Moral Behavior and Moral Development (John Wiley & Sons, New York), moral choice is prompted, amongst other things, by a motivational component. With this in mind, data obtained from a sample of four hundred financial sector operatives, employed in a rapidly developing region of China, was used to construct a relatively stable set of motivational typologies which could be used to predict choice within an agency-based context. A non-egoist version of the agency theory was developed, which permitted the modelling of alternative heuristic patterns. Altruists and persons identified as bordering on the verge of being classified as psychological egoists, refused to reorganize their motives when responding to a problem that included both moral hazard and adverse selection criteria. It was also possible to identify certain personal and contextual issues which discriminated between the typologies. Gordon Woodbine, Ph.D., FCPA is Senior Lecturer employed in the School of Accounting, Curtin University of Technology teaching undergraduate and post-graduate students in auditing, business ethics and governance. He has taught for extended periods overseas and is published in several refereed journals including Journal of Business Ethics, Asian Review of Accounting and Journal of Consumer Behaviour. Dennis Taylor Ph.D., FCPA is Chair Professor in Accounting at University of South Australia. Previously, he held professorial, associate dean, and head of school appointments at University of Adelaide, Curtin University of Technology and City University of Hong Kong. He is the author of over 100 publications in areas of corporate financial disclosures and public sector accountability.