Determinants and effects of sustainable CEO compensation: a structured literature review of empirical evidence

Winschel, Julija; Stawinoga, Martin

doi:10.1007/s11301-019-00154-9

Cited by 38 publications

(67 citation statements)

References 133 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Non-financial components in a firm's management compensation (e.g., Davila & Venkatachalam, 2004;O'Connell & O'Sullivan, 2014) are also given more importance in business practice, according to legitimacy and stakeholder theory. Sustainability management goals or management incentives, such as the recognition of social and environmental goals in compensation contracts, should increase the motivation of top managers to adopt IR with an appropriate level of quality (Winschel and Stawinoga 2019). While research on the effects of audit committee composition (e.g., effectiveness, size, expertise, independence, etc.)…”

Section: Content-related Implicationsmentioning

confidence: 99%

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

Velte

2021

J Manag Gov

View full text Add to dashboard Cite

Integrated reporting (IR) represents an innovative approach to business reporting especially by Public Interest Entities (PIEs). In addition to financial capital, the integrated report includes material information about manufactured, intellectual, human, social and relational, and natural capitals. Although there has been a steady growth in empirical IR research, there is—as yet—no literature review on the business case for IR. Thus, the purpose of this study is to convey a detailed understanding of the governance-, (non) financial performance-, and reporting-related determinants of IR and its contribution to firm value in line with the business case argument. To do so, we selected 85 quantitative peer-reviewed archival studies on that topic. We have then differentiated said studies between those that focus on IR adoption versus those that focus on IR quality, with a legitimacy- and stakeholder-theory-based framework. This differentiation is crucial, to stress the challenges of greenwashing policies and information overload. Here, in contrast to former literature reviews on IR, we provide new insights into this emerging research topic and concentrate on archival IR research. We are also interested in recent moderator- and mediator analysis in archival IR research since the business case argument for IR may require a specific environment, in addition to the main variables we have included. We likewise give a detailed overview of included variables and proxies and compare their main statistical effects. Our literature review demonstrates that (1) board composition and (2) stakeholder pressure positively influence IR quality; whereas (3) (non) financial performance leads to increased IR adoption and quality. We also find that both IR adoption and IR quality are linked with positive consequences on firm valuation, as they lead to higher total performance measures. Last but not least, this analysis includes useful recommendations for future IR research.

show abstract

Section: Content-related Implicationsmentioning

confidence: 99%

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

Velte

2021

J Manag Gov

View full text Add to dashboard Cite

show abstract

“…Executive compensation usually takes the form of a fixed-cash salary (i.e., non-incentive-based compensation), incentivebased (i.e., variable) payments (e.g., earnings-related bonus, stock options), and other types of compensation (e.g., severance agreements; Kovermann and Velte 2019). In light of the increased influence and power of the CEO, it is quite common for empirical research to examine CEO compensation while neglecting other executives (Winschel and Stawinoga 2019). Several other board variables were identified in our literature review, including expertise on the board and specific committees and board independence, which indicate high corporate governance quality, as well as CEO power and co-opted boards, which indicate low corporate governance quality.…”

Section: Datamentioning

confidence: 95%

“…As stakeholders criticized short-term orientation in management compensation contracts after the financial crisis of 2008-2009, clawbacks should promote top management incentives to rely on a more long-term and ethical behavior, as they may be punished for future events that conflict stakeholders' interests. Thus, future research designs should consider diversity variables (e.g., gender, nationality, age) or address the implementation of non-financial goals in management compensation contracts (Winschel and Stawinoga 2019;Obermann and Velte 2018).…”

Section: Recommendations For Future Researchmentioning

confidence: 99%

“…Our topic is important for practitioners, regulators, and researchers. From a practical perspective, modern management compensation systems should promote sustainable development by recognizing long-term value aspects and including nonfinancial issues (Winschel and Stawinoga 2019). Incentive-based management compensation and clawbacks have a strong impact on financial accounting (e.g., earnings management), other corporate governance factors (e.g., board composition) and corporate finance decisions (e.g., investment policy) (Jensen and Murphy 1990).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Determinants and consequences of clawback provisions in management compensation contracts: a structured literature review on empirical evidence

Velte

2020

Bus Res

View full text Add to dashboard Cite

The goal of this systematic literature review is to provide a detailed understanding of the determinants and consequences of clawback provisions in management compensation contracts, motivated by the increasing global regulatory, practical, and academic importance of implementing this new corporate governance tool. We identify 44 empirical (archival and experimental) studies on this topic and review them based on an agency-theoretical framework. Our review of empirical clawback research offers insights into this growing field and supports future researchers in developing new research questions. Our main results are as follows. First, we still know very little about the drivers of clawback adoption, as prior research concentrated on the consequences of clawback provisions. Second, many studies indicate that clawbacks lead to better earnings quality (reduced re-/misstatements), better pay-for-performance sensitivity, increased firm performance, greater value relevance, and lower overinvestment. While there are indications that clawbacks may serve an incentive-alignment function for managers, their contribution may be dependent on other corporate governance mechanisms, e.g. board composition, as significant moderators. We develop a research agenda with detailed recommendations for future research from methodological and content perspectives. We expect that the research activity in this field regarding the European capital market will increase in light of the EU shareholder rights Directive of 2017.

show abstract

“…For that reason, future studies could consider professional managers as participants in the experiment. Finally, future studies may consider a qualitative research method as an alternative method as it is also suggested by Winschel & Stawinoga (2019). A qualitative research method may serve to provide richer information.…”

Section: The Effect Of Compensation and Religiosity On Managers' Csr mentioning

confidence: 99%

The effect of compensation and religiosity on managers’ CSR decision

Kusuma

Adawiyah

Pramuka

et al. 2020

Jurnal Keuangan Dan Perbankan

View full text Add to dashboard Cite

This study aims to examine the relationship between compensation schemes and religiosity and managers' investment decisions in CSR. We argue that compensation scheme and managers' level of religiosity associate with managers' choice whether to invest in valueincreasing or value-decreasing CSR. Data were collected through a laboratory experiment which involved 100 participants. The Chi-square test results show that managers who work under a performance-based compensation tend to choose a value-increasing CSR. Meanwhile, managers who work under nonperformance-based compensation tend to choose a value-decreasing CSR. However, this study failed to prove the relationship between manager's religiosity level and CSR investment decision made by managers. A small variance of our participants' religiosity level may lead to this finding. This research contributes to the CSR and behavioral finance literature by providing an understanding of how compensation and religiosity can direct managers' investment decisions on CSR. Our results imply the importance of designing an appropriate compensation scheme in an organization in order to direct managers to make an optimal CSR decision. Abstrak Penelitian ini bertujuan untuk menguji hubungan antara skema kompensasi dan religiusitas dengan keputusan investasi manajer dalam CSR. Kami berpendapat bahwa skema kompensasi dan tingkat religiusitas manajer terkait dengan pilihan manajer apakah akan berinvestasi dalam CSR yang meningkatkan atau menurunkan nilai. Pengumpulan data dilakukan melalui eksperimen laboratorium yang melibatkan 100 partisipan. Hasil uji Chi-square menunjukkan bahwa manajer yang bekerja di bawah kompensasi berbasis kinerja cenderung memilih CSR yang meningkatkan nilai. Sementara itu, manajer yang bekerja di bawah kompensasi berbasis non-kinerja cenderung memilih CSR yang menurunkan nilai. Namun penelitian ini gagal membuktikan hubungan antara tingkat religiusitas manajer dengan keputusan investasi CSR yang dibuat oleh manajer. Variasi kecil dari tingkat religiusitas peserta kami dapat mengarah pada temuan ini. Penelitian ini berkontribusi pada literatur CSR dan behavioral finance dengan memberikan pemahaman tentang bagaimana kompensasi dan religiusitas dapat mengarahkan keputusan investasi manajer pada CSR. Hasil kami menyiratkan pentingnya merancang skema kompensasi yang sesuai dalam suatu organisasi untuk mengarahkan manajer untuk membuat keputusan CSR yang optimal.

show abstract

Determinants and effects of sustainable CEO compensation: a structured literature review of empirical evidence

Cited by 38 publications

References 133 publications

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

Determinants and consequences of clawback provisions in management compensation contracts: a structured literature review on empirical evidence

The effect of compensation and religiosity on managers’ CSR decision

Contact Info

Product

Resources

About