Pay Performance Sensitivity Before And After Sox
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Pay Performance Sensitivity Before And After Sox
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Author : Hui Chen
language : en
Publisher:
Release Date : 2014
Pay Performance Sensitivity Before And After Sox written by Hui Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
The purpose of this paper is to investigate the impact on pay-performance sensitivity of the Sarbanes-Oxley Act. We compare managers' pay-performance sensitivity before and after 2001-2002, a period during which regulatory changes were initiated to increase scrutiny over managerial manipulation and improve financial reporting quality. Based on ExecuComp data from 1992 to 2005 (and excluding the years 2001 and 2002), our results show that pay-performance sensitivity using either market-based or accounting-based measures of performance increased significantly following these events. When we further decompose executive pay into its cash-based and equity-based components, we find evidence of an increase in the link between performance and executive compensation for five of six measures for each performance metric. The evidence presented here is consistent with an improvement in the perceived credibility of reported earnings and an increased reliance on earnings in compensation contracts, which in turn resulted in an increase in the link between executive compensation and shareholder wealth.
Regulatory Commitment To Auditing
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Author : Hui Chen
language : en
Publisher:
Release Date : 2012
Regulatory Commitment To Auditing written by Hui Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
The purpose of this paper is to investigate the impact on pay-performance sensitivity of a commitment by regulatory bodies to monitor the auditing of managers' financial reporting. We approach our investigation first by modeling the effects of an imposed mandatory audit of the auditor. We suggest that in a more rigorous audit environment, the reliability of performance measures increases. In motivating employees to work to their maximum potential, investors can rely on these performance measures to better effect. We then test our model in an empirical setting by comparing managers' pay-performance sensitivity before and after the passage of the Sarbanes-Oxley Act of 2002 (SOX). Our model reveals that both managerial effort levels and pay-performance sensitivity increase from a laissez-faire environment with the introduction of a regulatory commitment to auditing. Consistent with the model's prediction, our empirical tests of the impact on managerial incentive schemes after SOX reveal that pay-performance sensitivity did in fact increase.
Effect Of The Sarbanes Oxley Act On Ceos Stock Ownership And Pay Performance Sensitivity
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Author : Hsihui Chang
language : en
Publisher:
Release Date : 2011
Effect Of The Sarbanes Oxley Act On Ceos Stock Ownership And Pay Performance Sensitivity written by Hsihui Chang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
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 Samp;P 1500 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: (i) stock ownership and (ii) 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.
The Sarbanes Oxley Act Of 2002
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Author : Daniel A. Cohen
language : en
Publisher:
Release Date : 2008
The Sarbanes Oxley Act Of 2002 written by Daniel A. Cohen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
The Sarbanes Oxley Act of 2002 (SOX) introduced several governance reforms that considerably increased the total risk exposure of CEOs. We examine the effects of these regulatory changes on compensation contracts of CEOs and their effect on risk taking subsequent to SOX. We find that while overall compensation did not change, salary and bonus compensation increased and option compensation decreased following the passage of SOX. The sensitivity of CEO's wealth to changes in shareholder wealth also decreased after SOX. These results indicate that the pay for performance sensitivity of CEO compensation has declined following SOX. Our results indicate that these changes reduced investments in research and development, and capital expenditures. We also document that the above changes in CEOs' pay for performance sensitivities and their risky investments following SOX are associated with a reduction in stock return volatility. However, we do not find any evidence indicating that these changes are associated with lower future operating performance.
Advances In Management Accounting
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Author : Laurie L. Burney
language : en
Publisher: Emerald Group Publishing
Release Date : 2019-07-16
Advances In Management Accounting written by Laurie L. Burney and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-16 with Business & Economics categories.
This volume of Advances in Management Accounting explores a variety of current issues through rigorous academic research. Topics include the link between CEO compensation and the 2008 financial crisis, the association between performance-based pay and employee honesty, and more.
Pay Without Performance
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Author : Lucian A. Bebchuk
language : en
Publisher: Harvard University Press
Release Date : 2004
Pay Without Performance written by Lucian A. Bebchuk and has been published by Harvard University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Business & Economics categories.
The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
Advances In Quantitative Analysis Of Finance And Accounting New Series Vol 14
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Author : Cheng F. Lee
language : en
Publisher: Center for PBBEFR & Airiti Press
Release Date : 2016-01-01
Advances In Quantitative Analysis Of Finance And Accounting New Series Vol 14 written by Cheng F. Lee and has been published by Center for PBBEFR & Airiti Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-01-01 with Business & Economics categories.
Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.
The Handbook Of The Economics Of Corporate Governance
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Author : Benjamin Hermalin
language : en
Publisher: Elsevier
Release Date : 2017-09-18
The Handbook Of The Economics Of Corporate Governance written by Benjamin Hermalin and has been published by Elsevier this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-09-18 with Business & Economics categories.
The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward
The Most Important Concepts In Finance
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Author : Benton E. Gup
language : en
Publisher: Edward Elgar Publishing
Release Date : 2017-11-24
The Most Important Concepts In Finance written by Benton E. Gup and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-11-24 with categories.
Anyone trying to understand finance has to contend with the evolving and dynamic nature of the topic. Changes in economic conditions, regulations, technology, competition, globalization, and other factors regularly impact the development of the field, but certain essential concepts remain key to a good understanding. This book provides insights about the most important concepts in finance.
Enterprise Law
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Author : Zenichi Shishido
language : en
Publisher: Edward Elgar Publishing
Release Date : 2014-08-29
Enterprise Law written by Zenichi Shishido and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-08-29 with Business & Economics categories.
Enterprise law represents the entire range of private contracts and public regulations governing the relationship of different capital providers. Enterprise Law comparatively analyses the way these fundamental legal frameworks complement each other in