We examine the role of cash flow from operations (CFO) in chief executive officer (CEO) cash compensation. We predict that CFO is contract-relevant in the presence of earnings, and more so when (1) the quality of earnings relative to the quality of CFO as a measure of performance is low and (2) the need for CFO as a financing source is high. Our analysis is motivated principally by normative arguments and anecdotes from financial disclosures linking CFO to managerial effort and contracts, notwithstanding the traditional role of earnings in performance measurement. We find that the weight of CFO in the compensation model is positive and significant in the presence of earnings and stock returns. We also find that the relative quality of CFO compared with that of earnings has a positive (negative) impact on the weight of CFO (earnings). We further find that the relative weight of CFO is enhanced substantially when enterprise activities crucially depend on internally generated cash flow. These findings are unaltered when we include CEO age, firm size, and risk in the model and allow the coefficients to vary across industries.
KeywordsCash flow from operations; Compensation; Earnings JEL Descriptors J3, L2, M41
L'information comptable et la rémunération des chefs de la direction : Le rôle des flux de trésorerie d'exploitation en présence de bénéfices
CondenséLes mesures comptables de la performance sont depuis longtemps utilisées dans les contrats de gestion (voir Pavlik, Scott et Tiessen, 1993, pour une recension des publications sur le sujet). Une mesure comptable de la performance est censée être pertinente à cet égard si elle * Accepted by Michel Magnan. We gratefully acknowledge insightful comments and suggestions by Michel Magnan (associate editor), and two anonymous reviewers. We also benefited from comments
Objective: This study was aimed to identify the residence of human fibrocartilage stem cells (hFCSCs), characterize their stem cell properties and investigate the functional mechanisms which regulate fibrocartilage stem cells (FCSCs) toward chondrogenic differentiation during cartilage homeostasis and repairing. Methods: Cytological characteristics of hFCSCs and human orofacial mesenchymal stem cells (hOFMSCs) were analyzed. Chondrogenic potential of hFCSCs was compared with hOFMSCs both in vitro and in vivo. Regulatory role of SOX9 during FCSCs chondrogenesis was studied by shRNA interference in vitro, and by GFP þ FCSCs treatment in rat condylar cartilage defect model. SOX9 expression was also examined in temporomandibular joint osteoarthritis (TMJOA) patients' cartilage surface. Results: hFCSCs exhibited typical mesenchymal stem cell characteristics, with significantly stronger chondrogenic capability compared to hOFMSCs. Moreover, hFCSCs showed remarkably increased expression of SOX9. During cartilage pellet culture, there was stronger SOX9 expression in hFCSCs than hOFMSCs. SOX9 shRNA interference downregulated chondrogenic capability of hFCSCs in vitro, as well as disrupting migration and chondrogenic differentiation of GFP þ FCSCs toward mature chondrocytes in rat condylar cartilage defect. Of note, SOX9 expression was also found suppressed in the condylar superficial zone of TMJOA patients.
Conclusion:We found the existence of FCSCs in human TMJ cartilage, and characterized their distinct stem cell features. SOX9 is essential for hFCSCs chondrogenic differentiation, and a comprehensive understanding of the regulatory role of SOX9 in hFCSCs would be important for exploring potential intervention strategy of condylar cartilage degradation during TMJ disorders.
SYNOPSIS
This study investigates the impact of job complexity and firm, as well as CFO-specific performance, on CFO compensation. We find job complexity and overall firm performance affects both CFO salary and bonus, while CFO-specific performance affects CFO bonus. Specifically, we find that CFOs are not only rewarded when their firms meet or beat earnings targets, but they get incremental rewards for managing earnings and/or expectations to allow their firms to meet or just beat those targets.
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