PurposeTalented managers arguably remain quintessential to firm value and performance. While the literature offers evidence for the long-term orientation of talented managers, there is a paucity of evidence on the short-term performance of managers. Here, we examine the relationship between managerial talent and working capital management (WCM).Design/methodology/approachThis study primarily employs a panel fixed-effect method controlling for firm-year and firm-industry for non-financial and non-utility firms for the years 1980 through 2016. Also, the authors control of potential bias that may impact the result. These controls include social capital, financial constraints and tests for endogeneity and spurious correlation.FindingsThe authors find the association between managerial talent and WCM to be positive and significant. The results indicate that talented managers have a higher cash conversion cycle. The empirical evidence still holds after controlling for social capital, religiosity and financial constraints. Also, the evidence still holds by employing an interaction term between Tobin's Q as a proxy for investment opportunities and talented managers.Practical implicationsThe finding may lend credence to executive contracts. Human nature, by default, is only vested on a net benefit for self-aggrandization. Self-aggrandization can be evident through structures in managerial contracts. These contracts usually tie consequences to long-term growths. If a benefit is offered based on short-term operational goals, talented managers may do more to the management of working capital.Originality/valueIn the managerial talent literature, talents reflect a holistic picture of one that can succeed in both the short-term and long-term goals of a company. Here, the authors show that talented managers are inefficient in meeting short-term goal – working capital management. Thus, the authors add to the research by providing evidence that talented managers are myopic.

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PurposeThis study examines the efficacy of compensation in encouraging corporate executives to promote corporate social responsibility (CSR). In particular, it closely examines the effect of a golden parachute (GP) on an executive's behavior toward CSR.Design/methodology/approachThis study uses longitudinal data on 1,301 US firms for the period from 1993 to 2013. The data comes from Compustat, MSCI ESG STATS, RiskMetrics and ExecuComp.FindingsWe find an inverse association between current and long-term compensations and GP on firms' CSR. However, a test on the moderating effect discloses that a GP and long-term compensation jointly and positively increase the firms' CSR performance. This increase supports the idea that executives with a GP seek to maximize their long-term wealth by approving CSR projects that add value. The results also show that female executives are more likely to promote CSR than their male counterparts, and older executives are less willing to engage in CSR projects.Practical implicationsAdding a GP contractual clause to the executive compensation package could encourage greater engagement in CSR projects. The CEO with a GP will ensure that the firm engages in only value-enhancing CSR projects; this should align the interest of the society (greater firm engagement in CSR) with the interest of the firm (value maximization).Originality/valueThis study contributes to the literature by examining the moderating effect of a GP on the association between CSR and executive compensation.

Purpose The purpose of this paper is to investigate the relationship between corporate board co-option and employee welfare practices.Design/methodology/approachThe authors employ several analysis techniques including univariate analysis, OLS regressions, Poisson regressions, and propensity score matching methodology. The sample consists of US public firms for the period of 1996–2017. The variables of interest are the employee welfare index (EWI) proposed by Ghaly et al. (2015) and the co-option ratio proposed by Coles et al. (2014).FindingsThe authors find that firms with a higher fraction of co-opted directors on their boards are less committed to the firms' employee well-being. The empirical results support the argument that the interests of co-opted directors are more closely aligned with the interests of the CEO who had an influence on selecting them to the board, which compromises their monitoring role.Originality/valueThis paper contributes in several ways to the literature on corporate governance and corporate social responsibility (CSR) by linking board co-option to employee welfare. By focusing on board co-option to explain the degree of firms' involvement in employee welfare, which is one of the crucial components of CSR performance, the authors provide pinpointed and detailed findings on a timely issue of CSR.

PurposeThe authors revisit the inquiry into the primacy of shareholders vis-à-vis stakeholders that has been debated since 19th Century. The authors consider B-business firms as the closest groups of firms that have considerable similarities to stakeholders' firms. The authors model the impact of being certified as stakeholders (B-business) firms in a worldwide environment.Design/methodology/approachEmploying daily returns data of B-corporations in a global setting during 2010–2021, the authors quantify and compare the firms' performance in the pre- and post-certified periods, measure the effect of their environmental social governance (ESG) scores on their performance and gauge the entire results on a standardized approach that yields easy interpretation.FindingsSubject to some caveats arising from limited coverage and the lack of data on proper control variables, the findings, based on the statistical significance of the estimated coefficients, do not indicate any changes in B-corporations' performance in their post-certification dates. Notwithstanding that, market factor appears to be the driving force consistently.Originality/valuePrior studies on B-corporations are overwhelmingly qualitative. The current study is the first study that evaluate performance of B-corporations' returns at firm level with daily data.

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Purpose The purpose of this paper is to investigate the influence of executive compensation on the propensity to manage earnings. In particular, the authors examine an executive contractual clause known as a golden parachute (hereafter GP is interchangeably used). Usually, the triggering of a GP occurs for the following reasons: in a takeover, in termination of employment, and if the executive remains with the company through a recessionary cycle. Specifically, the authors ask the following questions: for firms that their CEO have a GP, do these firms manage earnings more? Does the age of the CEO matter for firms that have adopted a GP concerning the managing earnings? Design/methodology/approach The sample is based on a review of the literature on GPs and managed earnings. the authors’ data come from COMPUSTAT, CRSP, EXECUCOMP and Risk Metrics, and consist of 1,184 US firms from 1992 to 2011. A GP is binary, whereas the authors represent managed earnings through accruals and real activity. Findings The authors find that the propensity to manage earnings varies on the type of methods strategically used. However, controlling for the effect of SOX reveals that GP firms are more likely to manage earnings. Younger CEOs are less likely to exacerbate earnings upward. Research limitations/implications The authors are limited to small sample based on when the data were collected. Practical implications The evidence shows that GP alleviates CEOs’ concerns on short-term profits. However, it entrenches CEOs. Particularly, CEOs with a GP are more likely to exacerbate earnings. Thus, there is a need for compensation committees to give considerable attention to how GPs are assigned. Originality/value To the authors’ knowledge, this is the first study that explores the effect of a GP on a firm’s propensity to manage earnings.

Purpose The purpose of this paper is to examine the influence of bank structure and earnings management on bank performance in international markets. Specifically, the authors empirically examine non-foreign banks in the following emerging countries: Brazil, China, India, Mexico, Nigeria, Russia, and South Africa. Design/methodology/approach A review of loan loss portfolio and bank’s power structure is examined to formulate testable conjectures. The authors used data collected from Bankscope for the aforementioned countries. The data range is from 1997 to 2009. Findings The results suggest that: first, bank market structure and earnings management have a significantly negative influence on bank performance. Second, the negative influence is more pronounced in banks with higher level of concentration and earnings management. Practical implications The evidence suggest that banks with monopoly power have a greater incentive to establish lending relationships, and monopoly enhancing regulation in the financial sector at the time of the Civil War contributed to industrialization in the USA. The evidence in the emerging market suggest that monopoly power (bank structure) and propensity to manage earnings leads to lower bank performance. As such, helping bankers in understanding the effect of their bank structure in relation to their performance. Originality/value To the author’s knowledge, this is the first study that explores the determinants of managed earnings and bank structure on bank performance in emerging markets.