On Copyright, Creativity, and Compensation
Blog: Reason.com
Copyright infringement hits home - a cautionary tale.
Blog: Reason.com
Copyright infringement hits home - a cautionary tale.
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In: Critical review of international social and political philosophy: CRISPP, S. 1-25
ISSN: 1743-8772
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In: Accounting and Business Research
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In: Corporate governance: international journal of business in society
ISSN: 1758-6054
Purpose
Given the serious question raised by the subprime of the 2008 global financial crisis over the rising practices of excessive rewarding of executives in the USA and European firms, the executive pay-performance nexus has emerged as a popular topic of debate in the contemporary corporate finance research. Conducted mostly on the Anglo-Saxon contexts, research outcomes have been inconclusive and dichotomous. Considering this backdrop, this study aims to investigate the endogenous relationship between executive compensation and risk taking in the context of the USA.
Design/methodology/approach
Using a large sample of non-financial firms from 2010 to 2020 based on panel data and two-stage least square regression. In this study, the riskier corporate decision is measured as book leverage and ratio of R&D expense to total assets. Chief executive officers' (CEO) experience and age are used as instrumental variables, and these are expected to influence compensation incentives and, hence, affect firm riskiness indirectly. Firm size, return on assets and CEO turnover are reported to affect compensation and corporate decisions, therefore, included as control variables. Given that higher executive compensation is related to riskier corporate decision in firms, this study incorporates total wealth (i.e. accumulated equity related compensation) as an additional proxy of compensation, and this selection is justifiable by the perfect contracting notion of the agency theory.
Findings
The results of this study show a significant positive and increasing nexus among compensation and riskier corporate decisions. Besides, the compensation level proxied through the percentage of each form of compensation in total compensation is very important as greater equity and greater salary diminishes risk taking.
Practical implications
The outcomes of this study have useful implications for firm stakeholders and policymakers.
Originality/value
The level of pay measured by the percentage of each type of compensation in total compensation is of utmost importance as it can increase or decrease risk taking in corporate decisions.
In: British journal of political science, S. 1-20
ISSN: 1469-2112
Abstract
This paper uses a conjoint survey experiment fielded in the US, Australia, Chile, and Argentina to develop and test the compensatory theory of tax fairness, which states that higher taxes on the rich can be used to compensate for other benefits unequally granted by the state. Drawing on social psychology, this paper argues that evidence of preferential treatment by the state violates well-established fairness principles and shows, experimentally, that it leads to taxation to restore equality in crisis times, irrespective of wealth and across a variety of settings. The paper makes two important contributions: it provides the first direct, causal evidence of the importance of compensatory arguments for tax preferences and presents unconfounded estimates of the effect of more established fairness considerations as benchmarks against which to compare the importance of compensatory arguments.
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In: Journal of Corporate Finance, Forthcoming
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In: Journal of accounting and public policy, Band 43, S. 107168
ISSN: 0278-4254
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In: Notre Dame Journal of International and Comparative Law
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In: CESifo Working Paper No. 10917
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In: Rock Center for Corporate Governance at Stanford University Working Paper Forthcoming
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