| 1. |
- Kallunki, Jenni, et al.
(författare)
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Do White-Collar Employee Incentives Improve Firm Profitability?
- 2018
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Ingår i: Journal of Management Accounting Research. - : American Accounting Association. - 1558-8033 .- 1049-2127. ; 30:3, s. 95-115
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Tidskriftsartikel (refereegranskat)abstract
- We use proprietary archival compensation panel data from Finnish white-collar employees (WCEs) over the period of 2002 to 2011 in order to examine the relationship between performance-based incentives for WCEs and the future profitability of the firm as well as to determine whether this association is moderated by task complexity. While many studies examine the determinants and performance effects of CEO compensation, virtually no evidence has been presented to indicate that explicit financial incentives for WCEs improve the profitability of the firm. Our empirical results show that performance-based incentives for WCEs are significantly positively related to the future return-on-assets, return-on-equity, and profit margin ratios of the firm. We also find that this effect comes from the performance-based incentives for low-level WCEs, corroborating the importance of implementing performance-based incentives also to low-task complexity jobs.
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| 2. |
- Puhakka, Mikko, et al.
(författare)
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Do an insider's wealth and income matter in the decision to engage in insider trading?
- 2018
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Ingår i: Journal of Financial Economics. - : Elsevier. - 0304-405X. ; 130:1, s. 135-165
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Tidskriftsartikel (refereegranskat)abstract
- We explore why insiders engage in informed trading, given the surprisingly small average insider returns reported in the literature and the potential costs involved. We begin by proposing a model of an insider's decision to engage in insider trading. We then empirically test the model's predictions using archival data of corporate insiders in Sweden. Consistent with the model, we find that less wealthy insiders are more likely to time their insider selling, and to sell in greater magnitudes, prior to abnormal price declines than wealthy insiders. We also find that less wealthy insiders with lower risk aversion as measured by their criminal behavior are particularly prone to timing their selling to avoid price declines.
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| 3. |
- Amir, Eli, et al.
(författare)
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Criminal convictions and risk taking
- 2014
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Ingår i: Australian Journal of Management. - : SAGE Publications. - 1327-2020 .- 0312-8962. ; 39:4, s. 497-523
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Tidskriftsartikel (refereegranskat)abstract
- An analysis of a proprietary dataset reveals that non-trivial proportions of directors, Chief Executive Officers (CEOs) and Chief Financial Officers in Swedish listed companies have been convicted or suspected of crimes. Based on prior literature, we argue that directors and senior executives who have been convicted or suspected of crimes are more prone to take risk. Consistent with this argument, we find that firms with more criminally convicted/suspected directors and CEOs report more volatile earnings, engage more in goodwill writeoffs due to more unsuccessful acquisitions, and recognize bad news in earnings in a less timely manner. We also find that these firms are, on average, smaller and less profitable. These findings highlight the role personal characteristics of directors and senior management play in managerial decisions.
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| 4. |
- Amir, Eli, et al.
(författare)
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The association between individual audit partners' risk preferences and the composition of their client portfolios
- 2014
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Ingår i: Review of Accounting Studies. - : Springer Verlag (Germany). - 1380-6653 .- 1573-7136. ; 19:1, s. 103-133
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Tidskriftsartikel (refereegranskat)abstract
- We explore whether audit partners' attitude towards risk, as measured by their personal criminal convictions, are reflected in the composition of their client portfolios. Analyzing a unique dataset of Swedish audit partners' criminal convictions, we find that the clients of audit partners with criminal convictions are characterized by greater financial, governance, and reporting risk than those of audit partners without criminal convictions. Also, clients of audit partners with criminal convictions pay larger audit fees, on average, than those of auditors without criminal convictions. © 2013 Springer Science+Business Media New York.
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| 5. |
- Beyer, Bianca, et al.
(författare)
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Paywatch – Directors’ skin in the game and executive compensation
- 2019
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Konferensbidrag (övrigt vetenskapligt/konstnärligt)abstract
- In this paper, we investigate the effects of the Board of Directors’ (BoD) personal wealth invested in the company they govern on executive compensation. We employ a Swedish panel data set over 9 years, from 1999 through 2007, consisting of 314 individual CEOs in 186 listed companies. We find a significant negative relation between average board members’ personal wealth invested and the level of CEO compensation, beyond what is explainable by economic determinants. Further, we find a significant negative relation between board members’ personal wealth invested and the sensitivity of CEO pay to firm performance, which alludes to a substitution effect of governance mechanisms. These companies have on average higher dividend payouts. At the same time, we find strong positive effects on firm performance. Overall, our results suggest that companies, where directors’ “skin in the game” is higher, compensate their top management team more conservatively, while performing better.
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| 6. |
- Elsilä, Anna, et al.
(författare)
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CEO personal wealth, equity incentives and firm performance
- 2013
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Ingår i: Corporate Governance. - : Wiley. - 1467-8683 .- 0964-8410. ; 21:1, s. 26-41
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Tidskriftsartikel (refereegranskat)abstract
- Manuscript Type: Empirical Research Question/Issue: In this paper, we explore the determinants and performance effects of a novel measure of executive incentives, that is, the elasticity of a CEO's total wealth to firm performance, computed as a CEO's ownership value relative to her total wealth. Research Findings/Insights: Using unique data on the total personal wealth of the CEOs of listed Swedish firms, we find that while CEOs typically own only a very small fraction of the shares of their firms, this ownership often constitutes a significant part of their total wealth. We also find that a CEO's total wealth elasticity is negatively associated with firm size and a CEO's age is positively associated with a firm risk environment. As for the effect on firm performance, we find that higher CEO's equity incentives enhance future accounting firm performance, when we estimate panel data regressions by taking into account the dynamic nature of endogeneity between a CEO's incentives and firm performance. However, we do not find any evidence that a CEO's equity incentives to be related to future stock returns. Theoretical/Academic Implications: Our analysis suggests that executives' incentives when measured as price-performance elasticity are economically more significant than has been often argued in the literature. Moreover, due to several advantages of price-performance elasticity over traditionally used fractional ownership and dollar-at-stake measures, the inferences drawn from this study with respect to determinants and performance implications of a CEO's incentives may be superior to those from prior studies. The result on the relation between firm size and a CEO's incentives is especially interesting, because, unlike fractional ownership, the elasticity of a CEO's total wealth to firm performance is not spuriously related to firm size. With respect to the relation between incentives and subsequent firm performance, our results are consistent with the view that higher CEO's incentives, measured as price-performance elasticity, enhance firm accounting performance. Overall, future studies should consider price-performance elasticity as an alternative measure of executive incentives in addressing various research questions. Practitioner/Policy Implications: The evidence in this paper suggests that executive incentives calculated relative to their non-firm wealth are economically more meaningful if compared to the traditionally used measures. As such, compensation consultants and boards of directors can consider this alternative measure when designing executive compensation plans and determining an appropriate level of ownership, when the information on executive non-firm wealth is available.
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| 7. |
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| 8. |
- Hjelström, Tomas, et al.
(författare)
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Executives' Personal Tax Behavior and Corporate Tax Avoidance Consistency
- 2020
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Ingår i: European Accounting Review. - : Taylor & Francis (Routledge): SSH Titles. - 0963-8180 .- 1468-4497. ; 29:3, s. 493-520
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Tidskriftsartikel (refereegranskat)abstract
- We analyze executives' (CEOs, CFOs, and Board Chairpersons) personal tax returns to investigate whether and how their personal tax behavior is associated with the tax avoidance of their firms. We develop various measures of executives' personal tax behavior that are related to their personal risk propensity, ethics, financial incentives, and awareness of tax planning opportunities and risks. Our empirical results show that CEOs' and CFOs' personal tax behavior is related both to nonconforming and conforming corporate tax avoidance. We find no such results for Board Chairpersons.
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| 9. |
- Jarva, Henry, et al.
(författare)
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Earnings performance measures and CEO turnover: Street versus GAAP earnings
- 2019
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Ingår i: Journal of Corporate Finance. - : Elsevier. - 1872-6313 .- 0929-1199. ; 56, s. 249-266
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Tidskriftsartikel (refereegranskat)abstract
- Prior research reports that analysts focus on street earnings, which are measures that typically exceed GAAP earnings. Using a sample of CEO turnovers from 1993 to 2016 we show that the likelihood and speed of forced CEO turnover - but not voluntary turnover - are higher when analysts exclude income-decreasing items. The association between exclusions and forced turnovers is particularly pronounced for high magnitude exclusions. We also show that greater street exclusion of income-decreasing items, the lower CEO bonus payouts. We find that boards use audited and more conservative GAAP earnings in evaluating and dismissing CEOs, except in the recent period of 2010–2016.
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| 10. |
- Kallunki, Juha-Pecka, et al.
(författare)
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Regulated and unregulated insider trading around earnings announcements
- 2009
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Ingår i: European Journal of Law and Economics. - : Springer-Verlag New York. - 0929-1261 .- 1572-9990. ; 27:3, s. 285-308
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Tidskriftsartikel (refereegranskat)abstract
- This paper analyses insider trading behaviour around annual and interim earnings announcements during changing legislative environments in Sweden from 1980 to 2003. Using a unique data set, we are able to explore the nature of insider trading patterns from unregulated to strongly regulated insider trading markets. We find limited evidence of opportunistic insider trading. Insiders seem to be reluctant to sell stocks before positive earnings announcements. They also tend to time their trades in conjunction with an immediate post-announcement period, i.e. "safety trading", which becomes more evident within stronger legislation environments. Some support for contrarian trading behaviour is also found.
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