Powerful CEOs, cash bonus contracts and firm performance

Bachmann, RL; Loyeung, A; Matolcsy, ZP; Spiropoulos, H

Powerful CEOs, cash bonus contracts and firm performance

Bachmann, RL

Loyeung, A

Matolcsy, ZP Spiropoulos, H

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Publication Type:: Journal Article
Citation:: Journal of Business Finance and Accounting, 2020, 47 (1-2), pp. 100 - 131
Issue Date:: 2020-01-01

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Field	Value	Language
dc.contributor.author	Bachmann, RL https://orcid.org/0000-0001-8568-4701	en_US
dc.contributor.author	Loyeung, A https://orcid.org/0000-0003-2049-0492	en_US
dc.contributor.author	Matolcsy, ZP	en_US
dc.contributor.author	Spiropoulos, H https://orcid.org/0000-0002-7748-6577	en_US
dc.date.issued	2020-01-01	en_US
dc.identifier.citation	Journal of Business Finance and Accounting, 2020, 47 (1-2), pp. 100 - 131	en_US
dc.identifier.issn	0306-686X	en_US
dc.identifier.uri	http://hdl.handle.net/10453/137310
dc.description.abstract	© 2019 John Wiley & Sons Ltd We investigate whether powerful chief executive officers (CEOs) influence the conditions of their cash bonus contracts. Specifically, we examine (i) the association between CEO power and the proportion of ex-ante cash bonus to base salary (bonus ratio), (ii) the association between CEO power and the relative use of non-financial to financial performance targets in cash bonus contracts, and (iii) the performance consequences of incorporating non-financial targets in cash bonus contracts. Results show that powerful CEOs are associated with greater ex-ante bonus ratios and higher proportions of non-financial performance targets compared to less powerful CEOs. Furthermore, the use of quantitative and corporate social responsibility (CSR)-related non-financial performance targets is positively associated with subsequent firm performance, and the use of undefined non-financial performance targets is negatively associated with subsequent firm performance. These results are robust to alternative econometric specifications and variable definitions.	en_US
dc.relation.ispartof	Journal of Business Finance and Accounting	en_US
dc.relation.isbasedon	10.1111/jbfa.12410	en_US
dc.rights	info:eu-repo/semantics/openAccess
dc.subject.classification	Finance	en_US
dc.title	Powerful CEOs, cash bonus contracts and firm performance	en_US
dc.type	Journal Article
utslib.citation.volume	1-2	en_US
utslib.citation.volume	47	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	open_access	*
pubs.issue	1-2	en_US
pubs.publication-status	Published	en_US
pubs.volume	47	en_US

Abstract:

© 2019 John Wiley & Sons Ltd We investigate whether powerful chief executive officers (CEOs) influence the conditions of their cash bonus contracts. Specifically, we examine (i) the association between CEO power and the proportion of ex-ante cash bonus to base salary (bonus ratio), (ii) the association between CEO power and the relative use of non-financial to financial performance targets in cash bonus contracts, and (iii) the performance consequences of incorporating non-financial targets in cash bonus contracts. Results show that powerful CEOs are associated with greater ex-ante bonus ratios and higher proportions of non-financial performance targets compared to less powerful CEOs. Furthermore, the use of quantitative and corporate social responsibility (CSR)-related non-financial performance targets is positively associated with subsequent firm performance, and the use of undefined non-financial performance targets is negatively associated with subsequent firm performance. These results are robust to alternative econometric specifications and variable definitions.

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http://hdl.handle.net/10453/137310