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- Executive compensation (3)
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Articles 1 - 8 of 8
Full-Text Articles in Corporate Finance
Value Creating Drivers For Effective Human Capital Management, Ser Keng Ang
Value Creating Drivers For Effective Human Capital Management, Ser Keng Ang
Research Collection Lee Kong Chian School Of Business
It is common for modern-day corporate leaders and academic writers to make claim that human resources is one of the most important assets in their organization (Guest, 2001). If that were the case, effective management of human capital would be a critical factor in the success of any organization. As an important organizational resource, human capital is expected to generate significant economic benefits from its deployment, development and retention (Flamholtz, 1999). There is widespread evidence that the effective use of human capital can also create durable competitive advantage for an organization (Barney, 1991; Becker & Gerhart, 1996; Lado & Wilson, …
What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life Disasters And Ceo Behavior, Gennaro Bernile, Vineet Bhagwat, P. Raghavendra Rau
What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life Disasters And Ceo Behavior, Gennaro Bernile, Vineet Bhagwat, P. Raghavendra Rau
Research Collection Lee Kong Chian School Of Business
The literature on managerial style posits a linear relation between a chief executive officer's (CEOs) past experiences and firm risk. We show that there is a nonmonotonic relation between the intensity of CEOs’ early-life exposure to fatal disasters and corporate risk-taking. CEOs who experience fatal disasters without extremely negative consequences lead firms that behave more aggressively, whereas CEOs who witness the extreme downside of disasters behave more conservatively. These patterns manifest across various corporate policies including leverage, cash holdings, and acquisition activity. Ultimately, the link between CEOs’ disaster experience and corporate policies has real economic consequences on firm riskiness and …
Slack Resources And The Rent-Generating Potential Of Firm-Specific Knowledge, Heli Wang, Jaepil Choi, Guoguang Wan, John Qi Dong
Slack Resources And The Rent-Generating Potential Of Firm-Specific Knowledge, Heli Wang, Jaepil Choi, Guoguang Wan, John Qi Dong
Research Collection Lee Kong Chian School Of Business
We examine how two types of slack resources relevant to knowledge employees—human resource slack and financial slack at the R&D functional level—influence the rent-generating potential of firm-specific knowledge resources. According to the resource- and knowledge-based views of the firm, firm-specific knowledge resources are critical for generating economic rents for a firm. However, without motivated knowledge employees investing in the corresponding specialized human capital in the process of absorbing and deploying firm-specific knowledge resources, the resource potential for rent generation would be greatly discounted. We argue that human resource slack among knowledge employees and financial slack available for R&D activities affect …
A State-Stewardship View On Executive Compensation, Hao Liang, Luc Renneboog, Sunny Li Sun
A State-Stewardship View On Executive Compensation, Hao Liang, Luc Renneboog, Sunny Li Sun
Research Collection Lee Kong Chian School Of Business
We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible ‘stewards’ rather than ‘agents’ of the state. We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets. Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform. In a social welfare perspective, such compensation stimulates not the maximization of shareholder value but the preservation of the …
The Role Of Deferred Pay In Retaining Managerial Talent, Radhakrishnan Gopalan, Sheng Huang, Johan Maharjan
The Role Of Deferred Pay In Retaining Managerial Talent, Radhakrishnan Gopalan, Sheng Huang, Johan Maharjan
Research Collection Lee Kong Chian School Of Business
We examine the role of deferred vesting of stock and option grants in reducing executive turnover. To the extent an executive forfeits all unvested stock and option grants if she leaves the firm, deferred vesting will increase the cost (to the executive) of early exit. Using pay Duration proposed in Gopalan, et al., (forthcoming) as a measure of the length of managerial pay, we find that CEOs and non-CEO executives with longer pay Duration are less likely to leave the firm voluntarily. Employing the vesting of a large prior-year stock/option grant as an instrument for Duration, we find the effect …
Optimal Ceo Compensation With Search: Theory And Empirical Evidence, Melanie Cao, Rong Wang
Optimal Ceo Compensation With Search: Theory And Empirical Evidence, Melanie Cao, Rong Wang
Research Collection Lee Kong Chian School Of Business
We integrate an agency problem into search theory to study executive compensation in a market equilibrium. A CEO can choose to stay or quit and search after privately observing an idiosyncratic shock to the firm. The market equilibrium endogenizes CEOs’ and firms’ outside options and captures contracting externalities. We show that the optimal pay-to-performance ratio is less than one even when the CEO is risk neutral. Moreover, the equilibrium pay-to-performance sensitivity depends positively on a firm's idiosyncratic risk and negatively on the systematic risk. Our empirical tests using executive compensation data confirm these results.
Ceo Characteristics, Ceo-Firm Match And Corporate Refocus Value, Sheng Huang
Ceo Characteristics, Ceo-Firm Match And Corporate Refocus Value, Sheng Huang
Research Collection Lee Kong Chian School Of Business
This paper investigates how CEO characteristics affect firm value through divestiture. Using a novel dataset tracking CEO’s career path, from which CEO’s talent and expertise are reasonably inferred, I find when CEOs have differing abilities across divisions of conglomerates, they more likely divest divisions that they are less qualified to manage, and focus on divisions of better match with their talents and expertise. The better match of their talents with firms’ retained assets is the source of value creation from refocusing divestiture. Divestitures that increase corporate focus but not improve the talent-asset match do not create value in long run. …
Search For Optimal Ceo Compensation: Theory And Empirical Evidence, Melanie Cao, Rong Wang
Search For Optimal Ceo Compensation: Theory And Empirical Evidence, Melanie Cao, Rong Wang
Research Collection Lee Kong Chian School Of Business
We integrate an agency model with dynamic search equilibrium to study three important issues concerning executive compensation. We show that 1) the equilibrium pay-to-performance sensitivity depends positively on a firm’s specific risk, and negatively on its systematic risk, which offers a plausible explanation for the inconclusive empirical relationship between the pay-to-performance sensitivity and a firm’s total risk; 2) a growing economy simultaneously induces the growth in executive compensation and firm size; 3) the faster growth of executive compensation relative to the growth of firm size in the past decade is mostly due to the increase in firms’ specific risks.