Agency conflicts,executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Based on a unique country set up with concentrated ownership of firms, strong representation of major shareholders on boards and one of the highest percentages of firms with dual-class shares worldwide I study CEO pay-performance sensitivity in Swedish listed firms in the years 2001–2013. Focusing on Type II agency conflict, I find that that pay-performance sensitivity in family-controlled firms with family CEOs is significantly lower than in other types of firms, and that dual-class firms have significantly lower sensitivity of pay to accounting performance than non-dual-class firms. The results suggest that in firms with type II agency conflicts compensation practices may be driven either by family ties or by the power preferences of the controlling shareholder that uses compensation to align CEO’s interest with his/her will rather than with financial performance. The study also documents that the link between CEO pay and performance disappears in the 2010–2013 period following the implementation of the European Recommendations regarding executive compensation. This finding is in contrast to the stipulated goal of the European Commission, ‘to ensure pay for performance’ (European Commission 2009).     

Corporate control and underinvestment

This paper reports a study of how the benefits that large shareholders derive from their control of a firm affect the equity issue and investment decisions of the firm. I introduce an explicit agency cost structure based on the benefits of control of the largest shareholder. In a simple extension of the model developed by Myers and Majluf (J Financial Econ 13:187–221, 1984), I show that underinvestment is aggravated when there are benefits of being in control and these benefits are diluted if equity is issued to finance an investment project. Using a large panel of US data, I find that the concerns of large shareholders about the dilution of ownership and control cause firms to issue less equity and to invest less than would otherwise be the case. I also find that it makes no significant difference whether new shares are issued to old shareholders or new shareholders.     

Corporate Diversification,Information Asymmetry and Insider Trading

The literature suggests that corporate diversification destroys firm value. This value destruction is usually considered to be a consequence of managers' pursuing diversification strategies to benefit themselves rather than to increase firm value. This paper provides evidence that casts doubt on this agency theory‐based explanation for corporate diversification. Evidence based on insider trading suggests that managers themselves consider their diversification strategies to be value‐increasing. Specifically, it is documented that corporate insiders (directors) purchase more of their firms' shares in the open market when corporate diversification is high. Moreover, insiders purchase more when the level of diversification discount is high, suggesting that they disagree with outside investors' undervaluation due to diversification. It is also found that the market reaction to insiders' purchases is positively related to corporate diversification. This result suggests that outsiders consider the amount of favourable information contained in insiders' purchases to increase with the extent of corporate diversification.     

股权分置改革:程序公正和投资者关系

中国社会正处于变革时期,诸多改革都涉及利益分配,改革的过程和结果对于评判改革的成败是相当重要的。本文借鉴社会学理论,从中小流通股东角度研究了股权分置改革背景下的投资者关系问题。本文为流通股东对股改程序公正的理解寻找了两个前因:信息披露和反馈的及时性以及流通股东潜在的影响力。研究发现,提高信息反馈的及时性和流通股东的潜在影响力可以改善流通股东对程序公正的理解,可以改善投资者关系。研究同时发现,流通股东对程序公正的理解是信息反馈及时性和流通股东潜在影响力对投资者关系的中介变量。最后,本文提出一些政策建议。     

Ownership concentration,contestability, family firms,and capital structure

This study analyses the distribution of power among the several blockholders of a firm and the identity of those blockholders as a determinant of firm leverage. Using a sample of 694 firms from 12 Western European countries, our results support a negative relationship between ownership concentration in the hands of the main blockholder and firm leverage. Moreover, we detect that the presence of a second and third large shareholder (beyond the first blockholder) has a significant positive effect on the leverage ratio. In addition, the results show that contestability in family firms plays a more relevant role. Finally, we show that family firms do have significant impact on firm leverage level, and this impact varies depending on the legal framework and institutional environment. In our main sample the results show family firms negatively affect market leverage, supporting the theory that family firms are more averse to an increase in the debt level due to the risk of bankruptcy and financial distress as a result of having an under-diversified portfolio. In contrast, the opposite effect is found in the sample that excludes the United Kingdom. This last result cannot be explained by agency theory, given that family businesses are those that suffer less from Type I agency problems. This result suggests either some difficulty in financing their investments by issuing new equity or the need to use debt as a signal of the quality of its investments. Our results prove to be stable against a battery of robustness tests.     

Small Enterprise: Finance, Ownership and Control

Finance, ownership and control issues have received a great deal of attention in recent years as centres of interest in the 'new institutional economics'. Much of the debate has been fuelled by the inability of neoclassical economics to explain the continued existence, and increasing importance, of small enterprises. Developments in agency theory, information asymmetry and signalling theory, and transaction cost economics are identified as contributing to a new approach. The concepts distilled from a review of these developments are then used in the analyses of well-known phenomena involving small enterprises. These include capital structure and access to capital markets featuring the finance gap, the underpricing of new issues and the small firm effect. In addition, going private, by means of management buy-outs, and franchising are examined. It is seen that the economic literature on finance, ownership and control helps to explain both the advantages and disadvantages of small enterprises. Their continued existence is seen as being due to a trade-off of various costs and benefits.     

并购后高管变更、合法性与并购绩效——基于制度理论的视角

并购后的高管变更对于企业的并购绩效具有重要的影响,但目前的研究结论没有取得一致性。本文基于制度理论的视角引入合法性的概念,通过123份并购样本实证分析了并购后高管变更、合法性以及并购绩效之间的关系。研究结果显示:并购后高管变更与并购的外部合法性和内部合法性之间均存在显著的负相关;而外部合法性和内部合法性对于并购绩效具有显著的积极作用。本研究结论对于我国企业的并购后高管变更决策以及如何提升并购绩效具有理论指导意义。     

资本结构、股权结构、成长机会与公司绩效

本文在代理成本理论的架构下,以公司成长机会为背景,分析了资本结构和股权结构对公司绩效的影响,并利用 1998 年年底之前在上海和深圳两个交易所上市的 498 家上市公司 1999 至 2001 年三年间1494 个观察值为样本进行了实证分析。结果表明,对于不同成长性的公司而言, 资本结构和股权结构对公司绩效的影响存在较大差异,从而为我们选择理想的资本结构和股权结构提供了有益的启示。     

企业内外部IT能力对绩效的影响机制研究

基于企业能力理论,对内外部IT能力与企业绩效的关系问题展开研究,实证研究结果显示,外部IT能力对企业的内部IT能力有正向的影响,组织学习在内外部IT能力对企业绩效作用的过程中起到了完全中介的作用。     

上市公司高管团队薪酬差距影响因素与影响效应:基于本土特色的实证研究

本研究基于锦标赛理论讨论了中国高管团队薪酬差距的影响因素,高管薪酬差距与公司绩效的关系,并利用2006年我国440家沪市A股上市公司年报数据进行了实证分析。分析结果表明,公司董事长总经理两职兼任会显著扩大高管团队薪酬绝对和相对差距,国有股比例的提高会对高管薪酬绝对与相对差距产生显著抑制作用。企业绩效、企业规模对高管薪酬绝对差距产生显著正向影响,但对相对薪酬差距的影响并不显著。分析结果发现高管团队薪酬差距对公司绩效的正向影响作用显著,锦标赛理论得到支持。本研究同时显示,团队薪酬水平对公司绩效的影响大于团队薪酬差距的影响,体现出目前高管更为关注的仍然是薪酬水平,这也为高管薪酬设计提供了新的管理启示。     

Competitive Dynamics between Multinational Enterprises and Local Internet Platform Companies in the Virtual Market in China

We adopt the dynamic capability perspective and the institutional view as the guiding theoretical lenses to explain the relative performance of foreign internet platform companies (IPCs) operating in China. Based on data obtained from 51 interviews a multiple‐case‐study approach is adopted, with representative matched cases between foreign IPCs, including Google, eBay, Amazon and Groupon, and local IPCs. The findings highlight the unique characteristics of the IPCs and the Chinese context that challenge assumptions prevailing in the literature of the applicability of firm‐specific advantages in determining a sustainable competitive advantage. We highlight the dynamic capabilities of the firm, such as flexibility and experimentation, in contributing to sustainable competitive advantage. Further, rather than focusing on firm‐specific resources, we find that the active agency of the firm can approach institutions as resources through external links with diversified institutional players, which is crucial for multinational enterprise IPCs to develop sustainable competitive advantage. Drawing on the findings we present a number of propositions and implications for theory and practice.     

CEO Duality,Agency Costs,and Internal Capital Allocation Efficiency

This study examines the impact of CEO duality on firms’ internal capital allocation efficiency. We observe that when the CEO is also chair of the board, diversified firms make inefficient investments, as they allocate more capital to business segments with relatively low growth opportunities over segments with high growth opportunities. The adverse impact of CEO duality on investment efficiency prevails only among firms that face high agency problems, as captured by high free cash flows, staggered board structure and low board independence. Depending on the severity of the agency problem, CEO duality is associated with a decrease in industry‐adjusted investment in high‐growth segments of 1% to 2.1% over the following year, relative to that in low‐growth segments. However, CEOs’ equity‐based compensation curbs the negative effect of CEO duality on internal capital allocation efficiency. Overall, the findings of this study offer strong support for the agency theory and postulate the internal capital allocation policy as an important channel through which CEO duality lowers firm value in diversified firms.     

CEO duality and agency cost: evidence from Bangladesh

This study examines if Chief Executive Officer (CEO) duality reduces the firms’ agency cost in Bangladesh. The agency costs are measured as two efficiency ratios: ‘expense ratio’ and ‘asset utilization ratio’. The finding is that, there is no significant relationship between CEO duality and agency costs. These findings imply that, duality may have given the CEOs enormous powers; it may have reduced the check and balance or board’s ability to exercise the governance (monitoring) function, which is not helpful to enhance firm efficiency. This study contributes to the global debate on CEO duality and provides a new avenue of knowledge on CEO duality and firm efficiency in the context of an emerging economy.     

Dual class shares,board of directors’ effectiveness and firm’s market value: an empirical study

This study aims to identify whether a relationship exists between the controlling shareholders’ voting power and outside directors’ effectiveness in maximizing firms’ financial performance. We analyze a panel data with 3057 observations for the 2000–2012 period using a random effects model, logit and probit regressions, and the two-stage model of Heckman in the Brazilian stock market. Our findings show that firms whose controlling shareholders use dual class shares to leverage their voting power have less independence from the board and worse financial performance and market value. Further, the percentage of outside directors tends to be ineffective in increasing the firm’s value, and in changing the firm’s chief executive officer (CEO) when (1) the controlling shareholder’s voting power is leveraged, or (2) when the CEO assumes a position on the board of directors simultaneously. We interpreted that these results are in line with the arguments in favor of the existence of a new agency cost, which is related to the undue obedience of board members to authority, such as the largest controlling shareholder or the CEO in Brazilian listed firms.     

The impact of family CEO’s ownership and the moderating effect of the second largest owner in private family firms

This study explores two ownership issues in private family firms. First, we investigate the relationship between the ownership of family CEOs and firm performance, and postulate that this relationship in private family firms is more complex than the inverted “U” relationship found in public family firms. Second, we predict a potential moderating effect of the second largest owner, who may exert a monitoring role on family CEOs. We focus on private family firms as recent studies show that private family firms have distinct features compared to public family firms, and that findings documented in public family firms may not apply to the ubiquitous, but much less studied, private family firms. We have applied agency theory to develop the two hypotheses, used secondary data on a large sample of private family firms, utilized an adjusted conventional quadratic technique to test the hypotheses, and validated the findings using a second method of piecewise linear specification. The results show that the non-linear relationship between the ownership of family CEOs and firm performance is more complicated than the often-documented inverted “U” shape from public firms. Meanwhile, the second largest owner with a high enough ownership stake can impose a positive moderating effect by mitigating potential agency problems caused by family CEOs.     

The Mirror Effect: Corporate Social Responsibility,Corporate Social Irresponsibility and Firm Performance in Coordinated Market Economies and Liberal Market Economies

We investigate the classic management debate of agency versus institutional pressures through the application of the varieties of capitalism literature. In particular, we examine corporate social responsibility (CSR), corporate social irresponsibility (CSiR) and their relationships with firm performance in two types of capitalist systems: coordinated market economies (CMEs) and liberal market economies (LMEs). We note that while the CSR literature has tended to develop a balanced view on the influence of agency and institutional pressures, the CSiR literature has tended to emphasize the influence of agency. The latter appears to be a result of the fundamental attribution bias, where irresponsible corporate behaviours are attributed to individual managers or organizations, rather than the institutional environment. Our results, which include five years of data across 16 countries, show significantly greater CSR and significantly lower CSiR in CMEs compared with LMEs. Further, we find a positive relationship between CSR and firm performance in CMEs but not LMEs, and a negative relationship between CSiR and firm performance in LMEs but not CMEs. Overall, our results demonstrate the influence of the institutional environment, suggesting that corporate behaviours mirror the external environment.     

投资机会（IOS）设定下公司内部治理对经营绩效的影响——基于中国上市公司的经验研究

传统的公司治理研究将处于不同组织环境的企业等同对待,造成了研究结论的较大分歧.本文依据投资机会集(IOS)理论,运用我国上市公司的经验证据,在设定投资机会集的条件下,考察了不同成长性的企业其公司治理对经营绩效的影响.研究结果表明:成长性较高的公司,其经营绩效的改善与独立董事比例、高管层的持股比例显著正相关,但与高管层年薪相关关系不显著;成长性较低的公司.其经营绩效的提高与独立董事比例和高管层的持股比例相关关系均不显著,但与高管层年薪存在弱的正相关关系.     

Corporate Political Activity and Firm Performance: The Moderating Effects of International and Product Diversification

Prior research has found that corporate political activity (CPA) can both positively and negatively impact firm performance. Combining agency theory with the resource-based view, we examine the relationship between domestic lobbying (a key form of CPA) and firm performance by explicating the moderating effects of international and product diversification. We argue that expansion into international and product markets increases a firm's resources and reduces agency costs in domestic lobbying. Our results, based on a sample of 737 firms, show that lobbying is positively associated with performance for firms that are diversified in both international markets and along product-lines; whereas lobbying is counter-productive for purely domestic and undiversified firms. Our results contribute to the literature on the firm performance implications of corporate political activity by highlighting the roles of international and product diversification.     

探索式创新、利用式创新与绩效:战略和环境的影响

本文基于397家中国企业的样本数据,对探索式创新、利用式创新与企业绩效之间的关系进行了实证研究,着重考察了探索式创新、利用式创新的内部匹配关系以及这两类创新行为与企业战略和环境的外部匹配关系。结果表明,两类创新行为分别对企业绩效有直接的正向影响,两类创新行为之间的内部匹配对绩效无显著影响,两类创新行为与企业战略和环境竞争性的外部匹配关系对绩效有显著影响。     

CEO burnout,managerial discretion,and firm performance: The role of CEO locus of control,structural power,and organizational factors

Despite the possibility of burnout resulting from dynamics in firms' upper echelons, little if any work has focused on chief executive officer's (CEO's) burnout and firm performance. Drawing on managerial discretion theory, this article analyzes the influence of CEO burnout on firm performance and the moderating roles of the individual (CEO locus of control), structural power (CEO duality and CEO tenure), and organizational characteristics (size, age, and resource availability) related to managerial discretion. Using a sample of 156 CEOs in Swedish firms, we find a negative association between CEOs who report higher burnout and firm performance. Our results confirm that CEO duality and resource availability ameliorate and firm size exacerbates the negative association between CEO burnout and firm performance. Contrary to our expectations, CEO locus of control, CEO tenure, and firm age do not influence this relationship. We discuss the implications of our research for upper echelons theory and strategic leadership theory.