业绩指标、业绩风险与高管人员报酬的敏感性

本文论述了通过提高高管人员报酬——业绩敏感性来激励高管人员努力工作,要受到业绩指标选择和业绩风险大小的影响。针对我国上市公司的实证研究发现,在控制公司规模、股权结构和公司成长性因素后,上市公司高管人员报酬契约能够针对高管人员职责的不同,合理选择业绩指标的报酬——业绩敏感性。但是,实证研究没有发现业绩风险大小对高管人员报酬——业绩敏感性有影响的证据。     

Customer prospects and pay-performance sensitivity: Evidence from Korea

This paper examines how business prospects in customer firms affect executive pay-performance sensitivity in supplier firms. Using Korean Input-Output Accounts Data and Business Confidence Index published by the Bank of Korea, I find that customer prospects are positively associated with executive pay-performance sensitivity and the association is extended to the components of performance in a way that encourages managers to better exploit the market opportunities. The positive association is more pronounced when the inter-industry data are more informative, when the firm belongs to a more competitive industry, and when the corporate governance is stronger.Data availabilityAll data are publicly available from sources identified in the text.     

Fundamentals and bubbles in asset prices: Evidence from U.S. and Japanese asset prices

This paper investigates the existence and extent of non-fundamental bubbles in both U.S. and Japanese asset prices by employing a flexible empirical method which allows us to decompose asset prices into fundamental and non-fundamental bubble components. This study finds that a substantial fraction of U.S. and Japanese asset prices is accounted for by non-fundamental bubble components and that these asset prices overreact to non-fundamental bubble shocks. In addition, allowing for time-varying interest rates as another fundamental factor does not change any qualitative results about the role of non-fundamental bubble components. This suggests that the present value model fails to explain volatile asset price behavior even with time-varying interest rates. This paper was initially written when I was visiting Keio University in Japan. I benefited from several discussions with Mike Dothan, Pat Hess, and Steve LeRoy in my department, Takashi Kaneko, Yukitami Tsuji and Naoyuki Yoshino at Keio University, and Yong-Seok Park at the International University of Japan. Special thanks are due to the anonymous referee and the editor of this journal, who provided many useful and insightful comments that helped to improve the paper. This research was in part supported by a grant from the International Program Development.     

Stabilizing non-fundamental asset price movements under discretion and limited information

Inflation, output and interest rate stabilization are all potential central bank objectives. We explore whether monetary policy should respond to asset price fluctuations when they are driven by irrational expectational shocks to the future returns to capital. In our model, an optimistic shock to future returns generates both an increase in equity prices and physical investment. The increased investment is inefficient and, thus, a central bank optimally responds to this expectations shocks. This induces a trade-off between stabilizing nominal prices and non-fundamental asset price movements. We compare the optimal policy under different assumptions: full versus limited information and commitment versus discretion. If the central bank has limited information about whether an asset price movement has a fundamental or non-fundamental origin, then the central bank responds less aggressively to the non-fundamental exuberance shocks than under full information. Without commitment, a central bank responds more aggressively to non-fundamental exuberance shocks.     

Is Innovativeness a Link between Pay and Performance?

The relationship between innovativeness and pay-performance sensitivity is theoretically ambiguous because innovative activities simultaneously enhance the productivity of executives in creating shareholder value (productivity effect) and increase the volatility of the firm's performance (volatility effect). The empirical findings from the pooled sample suggest that innovativeness and executive pay-performance sensitivity are inversely related. The extent to which the volatility effect outweighed the productivity effect was especially pronounced during the 2000-2003 market crash period. While the productivity effect is stronger than the volatility effect in both the CEO and low-free-cash-flow subsamples, the volatility effect is stronger than the productivity effect in both the non-CEO and high-free-cash-flow subsamples.     

The effect of financial reporting quality on CEO compensation structure: Evidence from accounting comparability

This study examines the effect of accounting comparability on the design of CEO compensation structure. After controlling for firm-specific attributes, we find that accounting comparability is positively associated with CEO equity-based compensation intensity and pay-performance sensitivity. This suggests that the improved comparability increases the usefulness of equity-based compensation and a firm is willing to offer more equity-based compensation contracts to CEOs and increase their pay-performance sensitivity. Further, we find that the impact of comparability on the CEO’s compensation contract increases with information asymmetry, which is consistent with the notion that accounting comparability is a quality of financial reporting that facilitates the use of equity-based compensation in a poor information environment. Our analysis also reveals that the effect of accounting comparability on CEO compensation structure is greater when a firm’s corporate governance is strong, consistent with the complementary relation between comparability and the exiting corporate governance in determining CEO compensation schemes. Overall, our evidence suggests that firms utilize more equity-based compensation as a proportion of total compensation under greater accounting comparability and enhance the alignment between equity-based compensation and firm performance.     

内部控制、产权与高管薪酬业绩敏感性

内部控制的实施约束了经理人的自利行为,从而有助于提升公司的业绩,那么理性的经理人必然会要求将其薪酬与公司的业绩挂钩,从而实现自身报酬的弥补。鉴于此,本文实证检验了内部控制质量与高管薪酬业绩敏感性之间的关系。结果发现:内部控制质量越高的公司,其管理层薪酬业绩的敏感度也越高,而且,相对于非国有控股的上市公司,国有控股上市公司的内部控制质量和薪酬业绩敏感度之间的协同性更加显著。进一步研究显示,随着时间的推进,上市公司内部控制质量与高管的薪酬业绩敏感性关系更为密切,说明内控的质量在不断提高。     

Monetary Policy Stress in EMU: What Role for Fundamentals and Missed Forecasts?

This article reexamines the problem of monetary policy stress in the EMU. In addition to estimating the amount of stress in particular countries, we investigate its sources by breaking it down into its “fundamental” parts, covering how it is a result of country-specific macroeconomic divergences and the EMU-wide “non-fundamental” component, with special attention given to the role of missed forecasts. Our results confirm that peripheral countries were exposed to risks emerging from low interest rates while the “core” countries did not suffer from much monetary policy stress. Interestingly, the bulk of it was non-fundamental, i.e., not caused by inflation and output gap differentials between countries. We show that missed forecasts did make an important contribution to this part of the stress and were mainly responsible for pushing the interest rate below its rule-consistent level.     

Non-compensation-related consultant service and CEO compensation

This study examines how consultants’ non-compensation-related consulting service (NCS) affects the contractual usefulness of accounting and stock information in executive compensation, as reflected in pay-performance sensitivity. The hypothesis is based on anecdotal evidence suggesting that consultants’ provision of NCS is likely to adversely affect the quality of CEO compensation plans. We investigate whether the consultants providing NCS are involved in potential conflicts of interest. The results show that CEO pay is higher in companies where consultants provide NCS and have a higher NCS fee ratio. The pay-performance sensitivity in CEO compensation decreases when consultants engage in NCS. The overall results are consistent with NCS representing a conflict of interest and compromising the quality of compensation committees.     

管理层业绩报酬敏感度、内部现金流与企业投资行为——对自由现金流和信息不对称理论的一个检验

本文考察了业绩报酬敏感度对企业内部现金流与投资行为之间关系的影响。文章发现投资现金流敏感度不仅受到内外部信息不对称导致的融资约束的影响,而且受到了股东-经理代理问题的影响,但是信息不对称理论的解释力度相对较强。另外,投资现金流敏感度和管理层业绩报酬敏感度之间的关系受到公司控股股东所有权性质的影响。     

The monitoring role of independent directors in CEO pay–performance relationship: the case of Malaysian government linked companies

This study looks into the pay-performance and monitoring issues in Malaysian government linked companies (GLCs). Our study utilizes 21 Malaysian public listed GLCs data from financial year 2001 until 2006. We adopt panel regression to study pay–performance relationship while the internal monitoring mechanism is measured by board independence. In our analysis, chief executive officer (CEO pay is regressed to individual performance as well as benchmarked against industry average. Generally, we document that the pay–performance relationship in Malaysian GLCs is sporadically significant, implying that CEO pay is not properly aligned to performance. However, pay-earning-sensitivity (EPS) is high and statistically significant when individual performances are benchmarked against industry average in GLCs with more than 50% independent directors (majority board). This implies that for Malaysian GLCs, a majority independent board is required to ensure effective monitoring on CEOs' performance.     

Information Production, Insider Trading, and the Role of Managerial Compensation

We analyze the information production decision of a manager who can trade on this information and whose compensation is increasing in the stock price. The amount of information produced increases with the stock's volatility and liquidity and decreases with the manager's pay-performance sensitivity. Insider trading regulations that symmetrically inhibit the manager's ability to buy and sell stock cause her to produce less information. But asymmetric insider trading regulations like the short sales prohibition have an ambiguous effect inducing her to produce more or less information depending on her pay-performance sensitivity. This contradicts the standard argument made by opponents of insider trading regulations that such regulations always reduce information production.     

On the rationality of Korea's stock market: was the recent Korean financial crisis due to fundamental factors?

This paper examines whether the recent financial crisis in Korea was due to fundamental factors. To address this issue, we identify various components of Korea's stock market prices (KOSPI) and examine their responses to different types of shocks. Given the stationary behavior of KOSPI dividends, we relate stock price directly to earnings by deriving and using a log-linear model of the spread between price and earnings with a time-varying discount factor. Therefore, stock-price movements are explained by earnings (numerator component), time-varying discount factors (denominator component), and non-fundamental factors. Although we find evidence of substantial non-fundamental components in Korea's stock market prices, the sudden decline in Korea's stock market prices during the 1997 financial crisis was primarily due to fundamental components, in particular, the numerator component (e.g. earnings) combined with the denominator component (i.e. time-varying discount factor) rather than non-fundamental factors.     

Compensation Design and Career Concerns of Fund Manager

We develop an optimal incentive contract for the fund manager with career concerns. Drawing upon the framework of Gibbons and Murphy (1992), we restructure the performance of fund manager with emphasis on the multiplicative effect of previous effort on the latter period, and derive the positive cross-period linkage of fund managers efforts. In particular, our study derives that a greater first-periods effort by the fund manager will induce more second-period effort and greater compensation in either fixed or variable (performance-related) portion of the payment. Though the total performance related pay might increase as the result of greater effort in the previous period, we show that the pay-performance sensitivity in the second period will decline. Moreover, the initial wealth increase will motivate the fund manager to exert more effort and induce better performance, but decrease the pay-performance sensitivity in the second period.JEL Classification: G2, J33, J41     

Institutional Monitoring and REIT CEO Compensation

Our objective in this paper is to investigate the relationship between institutional ownership and CEO compensation structure of REITs. Based on detailed analyses of data on institutional ownership, performance, CEO and board characteristics over the 10 year period 1998–2007, we find significant evidence that large institutions influence governance through CEO compensation—greater institutional ownership is associated with greater emphasis on incentive-based compensation (higher pay-performance sensitivity of CEO compensation), and higher cash and total compensation for CEOs. Further, we find that institutions are less active when managers are performing in a superior fashion. Two important conclusions emerge from the analysis. First, similar to unregulated firms, institutional owners do act as monitors in REITs. Broadly, this result suggests that governance is necessary for REITs. Second, institutional investors set a high pay-performance sensitivity for CEOs, but are willing to pay higher cash compensation to induce managers to take risk.     

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

In this paper, we examine the relation between quantitative disclosure of CEO pay and the optimality of pay structure in terms of 1) level of pay, 2) pay-performance relationship, and 3) CEO-to-employee pay ratio. We use the new reporting regulation in 2013, requiring large and medium-sized companies and groups in the UK to report a single figure of total pay, as an exogenous shock to pay disclosure. Our results are based on a hand-collected sample of FTSE 100 firms over the period of 2010–2017. The main findings are threefold: Firstly, we find that CEO total pay stays roughly the same before and after the new regulation. In addition, firms that voluntarily adopt the regulation early have higher pay increases than their counterparts that do not adopt early in univariate tests. Secondly, pay-performance sensitivity actually declines after the new regulation by more than 50%. This effect is particularly evident in firms with weak corporate governance. Thirdly, the effect of the reform on the CEO-to-employee pay ratio is minimal, whereby it declined slightly following the reform, but this is only significant in univariate tests. Our results suggest that the 2013 regulation which increases the reporting transparency has limited impact on total pay and pay-performance in the UK.     

COMPENSATION CONTRACTS OF CHIEF EXECUTIVE OFFICERS: DETERMINANTS OF PAY-PERFORMANCE SENSITIVITY

Compensation contracts of chief executive officers of large firms typically provide for a low linkage between compensation and stock performance. We test predictions of various theoretical models of managerial behavior using pay-performance sensitivity measures. We find that even though the sensitivity measures are low on average, they vary cross-sectionally, in a manner broadly consistent with predictions from the literature on efficient contracting.     

商业银行的行业特征与管理报酬

本文在综述了国内外相关研究的基础上认为,银行业的行业特征对管理报酬有显著影响:高负债率导致的风险转移要求商业银行使用较低的管理激励;低增长性和波动性一定程度上解释了银行业较低的报酬-绩效敏感性,但是这一点随着银行业投资机会的增加在发生根本性变化;不透明性意味着管理报酬更多地基于股票而不是会计的绩效测度;相似的生产技术表明较少的公司专有人力资本激励;银行监管则通过影响银行业市场结构、激励成本和资本监管从而在根本上影响管理报酬结构。     

A model of dynamic compensation and capital structure

This paper studies the optimal compensation problem between shareholders and the agent in the Leland (1994) capital structure model, and finds that the debt-overhang effect on the endogenous managerial incentives lowers the optimal leverage. Consistent with data, our model delivers a negative relation between pay-performance sensitivity and firm size, and the interaction between debt-overhang and agency issue leads smaller firms to take less leverage relative to their larger peers. During financial distress, a firm's cash flow becomes more sensitive to underlying performance shocks due to debt-overhang. The implications on credit spreads and debt covenants are also considered.     

Effect of the Sarbanes–Oxley act on CEOs’ stock ownership and pay-performance sensitivity

The main purpose of this paper is to provide evidence on the effect of the Sarbanes–Oxley Act on stock ownership and the various measures of pay-performance sensitivity of CEOs’ wealth. The Sarbanes–Oxley Act (SOX) provides a natural experiment for examining how stock ownership and executive pay structure adapt to a change in regulatory environment. Using annual compensation data of S&P 1,500 firms in 1994–2005, we examine the impact of SOX on stock ownership and pay-performance sensitivity of CEOs. Consistent with our expectations, we find that in light of SOX: (1) stock ownership and (2) the total pay-performance sensitivity of CEOs have decreased substantially, indicating that SOX induces a weaker incentive alignment between shareholders and CEOs. In contrast, we find that after SOX stock ownership and the total pay-performance sensitivity of CEOs have remained unchanged in the regulated industries.