The differential CEO dominance–compensation and corporate governance–compensation relations: Pre- and post-SOX

Cianci, Anna M.; Fernando, Guy D.; Werner, Edward M.

doi:10.1016/j.adiac.2011.06.001

Cited by 13 publications

(2 citation statements)

References 84 publications

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“…Thus, our dependent variable is the Acquisition Premium , which is the difference between the offer price relative to the stock price one day before the merger and acquisition announcement. In measuring CEO dominance ( CEODominance) , we consider two variables that have been used in the literature: DOM is the natural logarithm of CEO compensation scaled by the book value of assets (Brown and Sarma, 2007), and PayDiff is the natural logarithm of the difference in pay between the CEO and the next highest paid executive (Cianci et al. , 2011) scaled by the book value of assets.…”

Section: Methodsmentioning

confidence: 99%

CFO gender in curbing CEO dominance on overpriced acquisition premiums

Grossman

Naaman

Sahyoun

2021

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PurposeThe purpose of this study is to evaluate the tempering effect of the presence of a female chief financial officer (CFO) on potentially dominant chief executive officer (CEO) behavior expressed through the overvaluing of acquisition premiums.Design/methodology/approachThis study used Securities Data Corporation (SDC) database data over an eight-year period to analyze the relationships between CEO dominance and the acquisition premiums paid in an acquisition deal. The study also analyzes the effect of CFO gender in curbing CEO dominance in the acquisition deals. The authors employ clustered standard errors ordinary least squares (OLS) regression analysis along with robustness testing, which supports the validity of our conclusions.FindingsThe authors expect and find that as CEO dominance rises, so does the acquisition premium; however, the presence of a female CFO in such situations significantly reduces the overpayment of the acquisition premium.Practical implicationsThe study findings advocate for organizational change in the form of an increased presence of female CFOs within business organizations.Originality/valueThis study contributes to the accounting literature by timely exploiting a rising trend in which female executives are expected to become more prolific. The authors’ research indicates that their entrenchment into business organizations, thereby promoting gender diversity, produces beneficial outcomes for those organizations. It also capitalizes on the specific attributes of the CEO–CFO relationship, which lends itself to particular effectiveness in the hands of female CFOs.

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Section: Methodsmentioning

confidence: 99%

CFO gender in curbing CEO dominance on overpriced acquisition premiums

Grossman

Naaman

Sahyoun

2021

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“…In line with arm's length contracting, board of directors that operate at arm's length from executives endeavor to serve shareholder interests by adopting compensation schemes that are designed to offer managers efficient incentives to maximize shareholder value. As such, compensation contracts can therefore be considered a partial remedy to the agency problem, reducing potential costs from self-serving decisions by managers (Cianci et al, 2011). In the context of the innovating firm therefore, dominant CEOs can be incentivized to serve the longterm growth needs of the firm with performance contingent compensation schemes that serve shareholder interests.…”

Section: Ceo Incentive and Firm Innovationmentioning

confidence: 99%

CEO dominance and firm innovation effort

Prugsamatz

2021

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PurposeThe purpose of this paper is to investigate whether innovation effort is lower for firms exhibiting signs of higher chief executive officer (CEO) dominance and whether such CEOs can be incentivized to pursue risky ventures such as innovation projects in line with shareholder's interests that are geared toward the long-term growth of the firm.Design/methodology/approachThe paper utilizes panel data of US publicly listed companies (2007–2016) to address the influence of CEO dominance on firm innovation effort and the moderating effects of incentives in this relationship through ordinary least squares (OLS) estimations. A two-stage least squares (2SLS) technique is also employed to address possible endogeneity. As a robustness check, further analysis is conducted utilizing an alternative proxy for CEO incentive as well as Tobit analysis (with panel-level random effects).FindingsResults from both OLS and Tobit estimations offer two key findings. First, there is a significantly negative relationship between CEO pay slice and firm research and development (R&D) intensity. Second, the interaction effect of CEO incentives and CEO dominance is significant and positive.Research limitations/implicationsWhen provided with the right incentives, such as those that reward long-term performance, dominant CEOs can be incentivized to go after risky ventures like innovation projects that are crucial to promoting the long-term growth of the firm.Originality/valueThis paper utilizes R&D instead of patent outputs as proxies for innovation where the former enables studying R&D efforts for more recent periods compared to prior studies that utilize patent data.

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Changes in earnings announcement tone and insider sales

Tama-Sweet

2014

Advances in Accounting

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The differential CEO dominance–compensation and corporate governance–compensation relations: Pre- and post-SOX

Cited by 13 publications

References 84 publications

CFO gender in curbing CEO dominance on overpriced acquisition premiums

CFO gender in curbing CEO dominance on overpriced acquisition premiums

CEO dominance and firm innovation effort

Changes in earnings announcement tone and insider sales

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