Session 116

Discretion and Compensation

Track O

Date: Tuesday, October 9, 2012

 

Time: 14:15 – 15:30

Paper

Room: Dressing Room 220


Session Chair:

  • Elizabeth Lim, Georgia State University

Title: Firm-Level Governance Discretion from a Comparative Perspective: Triggers of Transition

Authors

  • William Judge, Old Dominion University
  • Ruth Aguilera, Northeastern University

Abstract: This paper describes and advances the notion of “governance discretion,” and explores when and how a firm can govern itself differently from its national governance environment. In so doing, we refine and extend “actor-centered institutionalism” by considering how national governance environments and firm governance arrangements co-evolve in the context of four stylized national governance bundles. Specifically, we advance five theoretical propositions that seek to identify what institutional forces within each national governance bundles must shift in order to expand or contract firm-level governance discretion. In so doing, we offer new theoretical insights into the field of comparative corporate governance, and refine and extend institutional theory.

Title: Outside Director Stock Options and Strategic Risk-Taking: The Moderating Roles of Slack and Non-Duality

Authors

  • Elizabeth Lim, Georgia State University
  • Brian McCann, Vanderbilt University

Abstract: Prior agency work has examined effects of absolute levels of outside director stock options on risk behavior without recognizing that relative pay could differentially affect risk-taking. We contribute by examining how (positive) deviation from prior option values influences risk decisions while identifying competing behavioral causal mechanisms. According to gain framing effect, positive context creates “gain” domain facilitating anticipation of higher wealth that reduces risk-taking. But according to “house money effect,” decision-makers with prior gains are risk-seeking because they are betting with house money rather than personal capital. We develop a contingency framework arguing that saliency of each view depends on context. We found positive deviation is positively associated with risk. High slack level and non-duality enhances risk-taking when “house money effect” is most salient.

Title: The Sweet Spot of Director Tenure and Executive Compensation

Authors

  • Jill Brown, Bentley University
  • Andrew Ward, Lehigh University
  • Anne Anderson, Lehigh University
  • Jesus Salas, Lehigh University

Abstract: This study examines the role of board tenure in governance effectiveness, measured by its influence on executive compensation. We examine this under the idea that there is a sweet spot for director tenure whereby within this sweet spot, directors provide the most value to shareholders as effective monitors of shareholder interests. The idea of a sweet spot implies that there is a nonlinear relationship between director tenure and governance effectiveness, represented in this study by the relationship of director tenure to the overall level of CEO compensation and the sensitivity of CEO compensation to firm performance.

Title: The Type of Stock Exchange and the Compensation Structure of Outside Directors: Evidence from Canada

Authors

  • Shamsud Chowdhury, Dalhousie University
  • Eric Wang, Athabasca University

Abstract: In Canada, the companies listed on the S&P /TSX Composite Index (TSX-C) are mature and large, while the companies listed on the S&P/TSX Venture Composite Index (TSX-V) are young, entrepreneurial, and medium-sized. Due to this fundamental difference, the role of boards of the companies on each of the exchanges is also likely to display significant differences. Accordingly, the question we investigate is: How is the compensation structure of the directors on the boards of companies listed on the TSX-C differ from that of the directors on the boards of the companies listed on the TSX-V? An empirical answer to the above question has important ramifications for researchers and designers of compensation packages for external directors in publicly-traded companies in Canada and the U.S.

All Sessions in Track O...

Sun: 08:00 – 09:15
Session 119: Strategic Leadership
Sun: 09:30 – 10:45
Session 120: Corporate Governance
Sun: 11:15 – 12:30
Session 122: Strategic Leadership and Corporate Governance Complementarities: Why we Are an IG
Sun: 15:15 – 16:30
Session 107: The Benefits of Experience: Vicarious and Otherwise
Mon: 08:00 – 09:15
Session 106: Why do Firms do Bad Things and What Do We Know about It?
Mon: 09:30 – 10:45
Session 103: Reputation: Organizational and Individual Dimensions
Mon: 13:30 – 14:45
Session 112: CEO and TMT Turnover: Firm Implications
Session 214: CEOs and Leadership
Mon: 16:30 – 17:45
Session 113: Large Shareholders are Doing it for Themselves
Tue: 08:00 – 09:15
Session 115: Board Member Characteristics and Board Diversity
Session 137: CEO Human Capital: Take a Little off the Top
Session 254: Capital Markets and Efficiency
Tue: 11:00 – 12:15
Session 111: Why Boards Look the Way They Do: Director Selection
Session 117: Heterogeneous Owner Types and their Influence
Tue: 14:15 – 15:30
Session 108: CEOs Matter, Don\'t They?
Session 116: Discretion and Compensation
Tue: 15:45 – 17:00
Session 114: Adoption of a Practice and its Implications
Tue: 17:30 – 18:45
Session 118: The TMT as a Unit
Session 215: CEO Personality and Characteristics Influencing Decision Making


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