Ownership Structure and Risk‐taking Behavior: Evidence from Banks in Korea and Japan

This study analyzes the effects of managerial ownership on the risk‐taking behavior of Korean and Japanese banks during the relatively regulated period of the late 1990s to the early 2000s. It finds that managerial ownership alone does not affect either the risk or the profit levels of Korean banks. In contrast, an increase in managerial ownership adds to the total risk of Japanese banks. However, increased risk‐taking behavior does not produce higher levels of profit for Japanese banks. The coefficients of the interaction term between franchise value and managerial ownership are negative and statistically significant for both the Korean and the Japanese banking industries. This means that an increase in managerial ownership in banks with high franchise values discourages risk‐taking behavior. The results confirm the disciplinary role of franchise value on the risk‐taking behavior of banks. These results also fall in line with previous literature supporting the moral hazard hypothesis based on research into the economies of the USA and other countries.     

市场化进程、企业绩效与高管过度隐性私有收益

制度环境是影响我国高管薪酬契约发挥激励作用的重要因素,本文以市场化进程为背景,检验企业绩效与高管过度隐性私有收益之间的关系,并探究市场化进程对上述关系的影响。研究发现：由于我国上市公司高管隐性薪酬契约普遍缺乏有效设计和监督,企业上期绩效与本期高管过度隐性私有收益负相关;随着市场化进程深入,民营企业绩效与高管过度隐性私有收益之间的负相关关系显著缓解,并且当民营企业高管权力较大时,市场化进程能够更加有效地抑制企业绩效与高管过度隐性私有收益之间的负相关关系,但是上述关系在国有企业中并未得到有效改善。进一步检验发现,市场化改革促使企业绩效和高管现金薪酬之间的相关性不断提高。本文的研究结果有助于揭示市场力量在提高高管薪酬契约激励有效性时发挥的作用及遇到的困难,为抑制国企高管过度隐性私有收益提供合理建议。     

CEO Hedging Opportunities and the Weighting of Performance Measures in Compensation Contracts

This study examines the rather controversial practice of managerial hedging, which allows CEOs to delink their compensation from stock price performance. We presume that boards are aware of these practices and adjust the weights placed on accounting‐based and stock‐based performance measures in executive compensation contracts to mitigate the problem. Empirically, we find that, in the presence of managerial hedging opportunities, accounting‐based performance measures receive more weight, whereas stock‐based performance measures receive less weight in determining executive compensation. Moreover, these results are more pronounced when managerial hedging needs are high. Regarding the effects of earnings management resulting from accounting‐based incentives, we find that good auditing and strong governance mechanisms strengthen the benefit of placing more weight on accounting‐based performance measures. Taken together, our findings suggest that corporate boards shift the relative weights of performance measures in compensation contracts in response to managerial hedging opportunities, which is consistent with optimal contracting.     

Industry salary gap incentive and enterprise innovation

The impact of an industry salary gap on corporate innovation is a topic that has attracted great interest. To enrich and expand research on this topic, this research aims to measure this impact from the perspective of the governance effect. The results show that a salary gap across industries significantly drives enterprise innovation at firms with higher agency costs. According to this result, reducing agency costs is the potential mechanism that drives this effect. In this way, this salary gap can drive enterprise innovation. Also, the results provide further evidence that the industry salary gap drives enterprise innovation. In addition, the driving effect of the industry salary gap on enterprise innovation is more significant in industries experiencing a recession and in enterprises with higher financial issues.     

Discretionary Accounting Accruals,Managers' Incentives,and Audit Fees*

This paper examines the linkages between discretionary accruals (DAs), managerial share ownership, management compensation, and audit fees. It draws on the theory that managers of firms with high management ownership are likely to use DAs to communicate value‐relevant information, while managers of firms with high accounting‐based compensation are likely to use DAs opportunistically to manage earnings to improve their compensation. OLS regression results of 648 Australian firms show that (1) there is a positive association between DAs and audit fees; (2) managerial ownership negatively affects the positive relationship between DAs and audit fees; and (3) this negative impact is further found to be weaker for firms with high accounting‐based management compensation.     

Discretion in Financial Reporting: The Voluntary Disclosure of Compensation Peer Groups in Proxy Statement Performance Graphs*

We examine the 49 Standard & Poor's (S&P) 500 firms that voluntarily disclosed in their 1993 proxy statements, the composition of the comparison group used by each board's compensation committee to set executive compensation policies. We hypothesize that the net benefits of this disclosure are largest when (1) there is a high degree of stakeholder concern about compensation, (2) compensation policies are defensible, and (3) corporate governance is strong. Consistent with our stakeholder concern prediction, disclosing firms have higher compensation levels and are more apt to have received prior shareholder proposals about executive compensation. Contrary to this prediction, we find a negative association between financial press coverage of compensation policies and the probability of disclosure. Additionally, the disclosure decision is unrelated to the defensibility of compensation policies and the firm's corporate governance profile. Industry-adjusted firm performance, managerial entrenchment, CEO tenure, institutional holdings, and compensation committee independence variables are insignificant. We also compare the financial performance and compensation practices of compensation peers to two yardsticks — performance and pay practices at the sample firms and the corresponding S&P industry index firms. The compensation levels of compensation peers exceed those of the firms in the corresponding S&P industry indexes. Because (1) compensation levels and performance sensitivities at sample firms are more similar to those at compensation peers than to those at S&P industry index firms, and (2) the superior financial performance and higher performance sensitivities of disclosing firms justify high pay, this evidence suggests that the compensation peers of disclosing firms are an appropriate comparison group.     

上市公司发放现金股利的价值效应——基于委托代理问题视角的实证研究

现金股利发放反映了债权人、股东、管理者之间的利益分配关系,现金股利的价值效应受到委托代理问题的影响。采用2008—2017年沪深A股上市公司作为研究样本,在委托代理理论的分析框架下实证检验我国上市公司发放现金股利的价值效应。研究表明,发放现金股利可能会损害债权人利益,过度债务公司发放现金股利的价值效应较小,而债务不足公司发放现金股利的价值效应较大。基于管理者代理问题视角的研究发现,现金股利可以有效发挥降低管理者代理成本的作用,当管理者代理问题严重时公司发放现金股利的价值效应更大。基于控股股东代理问题视角的实证结果表明,现金股利可以作为替代性的治理机制约束控股股东行为,当控股股东代理问题严重时现金股利具有更高的价值效应。     

INTRAINDUSTRY SPECIALIZATION AND THE UNITED STATES–CENTRAL AMERICA–DOMINICAN REPUBLIC FREE TRADE AGREEMENT

This paper examines changes in intraindustry specialization indicators over the 1992–2004 period to assess the potential for structural adjustment problems that may arise in the United States with growth in trade resulting from the United States–Central America–Dominican Republic Free Trade Agreement (CAFTA‐DR) between the United States and six Central American countries—Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and the Dominican Republic. CAFTA‐DR will expand market access for US exporters. Few US industries are likely to encounter structural adjustment problems. Given the relatively large size of the US economy, and the small number of industries that face potential adjustment pressures, the United States should have liberalized all trade immediately. When potential adjustment pressures are indicated, long tariff phaseouts, complex rules of origin, and import safeguards are used to delay factor adjustments in import‐sensitive industries.     

管理层权力、薪酬差距与绩效

已有研究发现,中国上市公司管理层的薪酬差距总体上具有锦标赛作用,即薪酬差距有利于提升绩效。但是,本文的进一步研究发现,相对于其他企业,在管理层权力大的企业中,高管团队内部的薪酬差距以及核心高管与全体员工的薪酬差距都更大。但业绩并没有更好。这些证据表明管理层权力会降低薪酬激励绩效,有必要重视管理层权力问题。研究还发现,高管团队内部的薪酬差距有利于提升绩效,但核心高管与全体员工的薪酬差距没有带来业绩的显著提升,说明公司总体薪酬差距过大可能因失去公平而影响绩效。     

TESTING PROFIT AND STRUCTURE RELATIONSHIP IN THE EUROPEAN BANKING MARKETS USING EFFICIENCY MEASURES

This paper provides a comparison between the developed and developing European countries through investigating the profit–structure relationship in the banking industries. The reduced‐form profit equations are estimated for each group of countries for the period 1995–2006. The results suggest that the inclusion of X‐efficiency and scale efficiency directly in the reduced‐form profit equation is crucial in explaining the bank profit–structure relationship in the European banking markets. When we control for direct measures of efficiency, the market share and concentration coefficient become insignificant in all regressions. The results support the efficiency versions of the efficient‐structure hypothesis over the relative market power and structure–conduct–performance hypothesis. For the developing economies of Europe, the findings of the paper indicate that efficiency is a crucial factor for establishing a sound banking system and the banks in these countries should increase their scale of operations to attain an optimal profit level.     

Outside Blockholders' Monitoring of Management and Debt Financing

Corporate governance mechanisms designed to alleviate manager‐shareholder agency conflicts can worsen shareholder‐bondholder conflicts. This study examines how one such corporate governance mechanism, monitoring by large outside shareholders, influences the choice between public and private debt. I conjecture and find that firms with higher outside blockholdings are inclined to choose bank loans over public debt when they borrow, consistent with the notion that banks are better monitors than public debt markets. I also find that bank loans carry less price protection than corporate bonds against increased agency risk associated with outside blocks. Corroborating the monitoring story, I document that bank loans contain more accounting‐based covenants and dividend restriction provisions for firms with higher outside blockholdings than for those with lower blockholdings. I find no such relation for public debt covenants. This supports that banks' monitoring of their loans counters the agency risk caused by blockholders. This study extends prior research that associates governance mechanisms with agency costs of debt, by incorporating lenders' differential monitoring mechanisms in the overall corporate governance system.     

Voting rules and the success of connected lending in 19th century New England banks

How well do decision-making processes within firms serve as control mechanisms? The voting rules governing loan approval in early 19th century New England banks are analyzed to find out. These banks exhibited high levels of lending to directors and their associates. Some theories of corporate governance argue that this could lead to increased managerial opportunism. However, a model shows that banks that require more votes to be won in the loan approval process prevent projects with private gains and social costs. The historical data are consistent with the idea that higher levels of consensus raised the profitability of banks.     

Industrial structure change and economic growth: A China-Russia comparison

This paper examines the sources of economic growth and the nature of industrial structure change in China over the past decade, with a comparison to those in Russia. It shows that over the observation period between 1995 and 2008, the Chinese economy was concentrated relatively more in the manufacturing sector and relatively less in the service sector than the Russian economy. In addition, this paper finds that the higher economic growth rate in real GDP and aggregate labour productivity growth between 1996 and 2008 in China than in Russia was broadly based, with most industries contributing to China's better performance. Furthermore, it reveals that the acceleration in economic growth in China in 2003–2008 over 1996–2002 was mainly traced to an increased contribution from the manufacturing sector and to a lesser degree the service sector, while in Russia, it was the service sector, followed by the primary sector driven by the mining and oil and gas extraction industry. These results suggest that the Chinese and Russian economies complement each other, which bodes well for further economic cooperation and trade between the two countries.     

Accounting Discretion and Managerial Conservatism: An Intertemporal Analysis*

Accounting discretion and the principle of conservatism are two salient features embedded in financial reporting systems. Arguably, the practice of conservative accounting choices can never be well understood without incorporating their effect on future periods (the intertemporal effect). This paper provides one explanation for managerial conservatism in a two‐period agency model with hidden information (a binary project type) and hidden actions (the agent's efforts). A piece‐wise linear incentive scheme with accounting earnings as the performance measure is employed. The agent's discretion is the choice of a depreciation method. Discretion is valuable if and only if the agent's marginal productivity of a “bad” project is greater than that of a “good” project, but not to an extreme degree. A conservative depreciation method decreases current compensation in exchange for a “bet” on future compensation and, hence, serves as a commitment device for the agent to signal that the prospect is indeed good. The accounting mechanism replicates the performance of the optimal direct mechanism.     

CEO compensation and firm performance in Japan: Evidence from new panel data on individual CEO pay

Prior studies on Japanese executive compensation have been constrained by the lack of longitudinal data on individual CEO pay. Using unique 10-year panel data on individual CEO's salary and bonus of Japanese firms from 1986 to 1995, we present the first estimates on pay-performance relations for Japanese CEO compensation. Specifically we find consistently that Japanese CEO's cash compensation is sensitive to firm performance (especially accounting measures), and that the “semi-elasticity” of CEO's cash compensation with respect to ROA is 1.3 to 1.4, which is in general agreement with prior estimates elsewhere. As such, our estimates do not support that Japanese corporate governance is unusually defunct with regard to the significance and size of the sensitivity of CEO compensation to accounting profitability. On the other hand, to be consistent with the literature on Japanese corporate governance that tends to downplay the role of shareholders and stress the role of banks and employees, we find that stock market performance tends to play a less important role in the determination of Japanese CEO compensation. Finally, we find that the bonus system makes CEO compensation more responsive to firm performance in Japan. The finding is in contrast to the literature on compensation for regular employees in Japan which often argues that bonus is a disguised base wage. J. Japanese Int. Economies 20 (1) (2006) 1–19.     

Screening for Managerial Objectives

The debate between agency and stewardship theorists on the nature of managerial objectives in itself implies that a principal may be uninformed about managers' objectives. This article introduces a model of adverse selection in managerial types where classically opportunistic agents are contrasted with stewards who exhibit intrinsic preferences for the organization's success and experience betrayal (crowding out) when they are incentivized as if they were agents. The analysis characterizes stewardship inefficiencies not previously identified by stewardship theorists. This inefficiency is minimized via a menu of contracts that emphasizes the fixed component of pay for stewards. Moreover, steward‐run firms are more successful than agent‐run firms.     

管理者薪酬对过度自信的影响研究——基于深市A股上市公司的经验证据

文章利用2007-2010年我国深市A股上市公司中管理者持股的公司为样本,采用随机效应模型实证检验管理者薪酬对其过度自信的影响,结果发现:管理者薪酬对其过度自信具有正向促进作用.与非国有上市相比,提高国有上市公司管理者的薪酬更容易导致其过度自信.当公司所在地市场化进程不同时,市场化程度越高,管理者薪酬越高越容易导致其进度自信.     

银行负债、预算软约束与企业投资

国外的研究认为负债能降低企业的代理成本。影响企业的投资行为。本文从预算软约束的视角,实证检验了我国企业银行负债的这种治理作用,研究结果表明,总体上我国企业银行负债抑制了投资规模的扩张;但相对于非国有控股上市公司来说,国有控股上市公司因具有更强的预算软约束预期,银行负债对其投资规模扩张的抑制作用更弱;相对于中央国有控股上市公司来说,地方国有控股上市公司的银行负债对其投资规模扩张的抑制作用更弱。     

Corporate finance and state enterprise reform in China

This paper uses a novel approach in addressing two puzzles in the field of corporate finance in China, where government is a major player. In addition to the traditional approach based on agency theory and information asymmetry, the paper uses the political costs approach in studying the stock dividend puzzle and rights issues puzzle. The paper finds that the extent of political interference, managerial entrenchment, and institutional control affects corporate financing choices and dividend distribution decisions. The result sheds new light on improving the important corporate governance aspects of state enterprise reform in China.     

Determinants of Taiwan's Trade Liberalization: The Case of a Newly Industrialized Country

This paper attempts to account for the success of policy reform in Taiwan's trade liberalization through an investigation of the periods 1986–92, and 1992–95. The objective is to undertake an empirical examination of Haggard et al.'s (The political feasibility of adjustment in developing countries. Development Centre of the OECD, OECD, Paris, 1995) strategies for minimizing the political costs involved in implementing policy reforms. Empirical evidence supports the Haggard et al. arguments, that is, indirect compensation is used to facilitate the implementation of trade liberalization for downstream industries, while the speed of trade liberalization within certain specific industries is comparatively slow. Furthermore, in a democratic regime, the pressure brought to bear by well-organized domestic interest groups, along with the pressure from international interest groups, can strongly influence the pattern of trade liberalization policies.