A Shareholder Value and Agency Theory Based Compensation System PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download A Shareholder Value and Agency Theory Based Compensation System PDF full book. Access full book title A Shareholder Value and Agency Theory Based Compensation System by Arne Wolter. Download full books in PDF and EPUB format.
Author: Arne Wolter Publisher: GRIN Verlag ISBN: 3638110311 Category : Business & Economics Languages : en Pages : 92
Book Description
Diploma Thesis from the year 2000 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,0 (A), Technical University of Braunschweig (Department of Accounting/College of Business Administration), language: English, abstract: "The fundamental goal of all business is to maximize shareholder value." This statement has become commonplace not only in corporate America, but it is also the imperative statement of business around the world. A failure to seek to maximize shareholder value results in pressure from the board of directors and activist shareholders. The takeover movement of the latter half of the 1980s provided another powerful incentive for managers to focus on creating value. This is grounded on the fact that the only compelling takeover defense is to deliver superior shareholder value. Given the globalization of capital markets and their diminishing boundaries, economic systems will slowly run out of capital, if they are unable to create shareholder wealth and thereby attract investors. If economic systems are unable to provide superior or at least satisfying returns they will fall further and further behind in global competition and will lose employment opportunities. Thus, a value-based system grows in importance as capital becomes more mobile. Although shareholder value metrics and value-based management are widely known they are far from being universally applied. Years of restructuring and employee layoffs frequently attributed to shareholder value considerations coupled with self-interested management and shortsighted focus on current stock price has promoted frustration and uncertainty. Thus, it is critical to fully understand the shareholder value approach and its variants. Additionally, it is vital for the shareholder value approach that the objectives of the mangers and the company′s shareholders are aligned and focused on delivering superior shareholder value. The relationship between manager and stockholder can best be examined by the agency theory that studies the contract between agents (e.g. managers) and principals (e.g. stockholders).3 An overview of a holistic shareholder value and agency based compensation system is the topic of this paper.
Author: Arne Wolter Publisher: GRIN Verlag ISBN: 3638110311 Category : Business & Economics Languages : en Pages : 92
Book Description
Diploma Thesis from the year 2000 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,0 (A), Technical University of Braunschweig (Department of Accounting/College of Business Administration), language: English, abstract: "The fundamental goal of all business is to maximize shareholder value." This statement has become commonplace not only in corporate America, but it is also the imperative statement of business around the world. A failure to seek to maximize shareholder value results in pressure from the board of directors and activist shareholders. The takeover movement of the latter half of the 1980s provided another powerful incentive for managers to focus on creating value. This is grounded on the fact that the only compelling takeover defense is to deliver superior shareholder value. Given the globalization of capital markets and their diminishing boundaries, economic systems will slowly run out of capital, if they are unable to create shareholder wealth and thereby attract investors. If economic systems are unable to provide superior or at least satisfying returns they will fall further and further behind in global competition and will lose employment opportunities. Thus, a value-based system grows in importance as capital becomes more mobile. Although shareholder value metrics and value-based management are widely known they are far from being universally applied. Years of restructuring and employee layoffs frequently attributed to shareholder value considerations coupled with self-interested management and shortsighted focus on current stock price has promoted frustration and uncertainty. Thus, it is critical to fully understand the shareholder value approach and its variants. Additionally, it is vital for the shareholder value approach that the objectives of the mangers and the company′s shareholders are aligned and focused on delivering superior shareholder value. The relationship between manager and stockholder can best be examined by the agency theory that studies the contract between agents (e.g. managers) and principals (e.g. stockholders).3 An overview of a holistic shareholder value and agency based compensation system is the topic of this paper.
Author: Jennifer Carpenter Publisher: Springer Science & Business Media ISBN: 1475751923 Category : Business & Economics Languages : en Pages : 159
Book Description
Executive compensation has gained widespread public attention in recent years, with the pay of top U.S. executives reaching unprecedented levels compared either with past levels, with the remuneration of top executives in other countries, or with the wages and salaries of typical employees. The extraordinary levels of executive compensation have been achieved at a time when U.S. public companies have realized substantial gains in stock market value. Many have cited this as evidence that U.S. executive compensation works well, rewarding managers who make difficult decisions that lead to higher shareholder values, while others have argued that the overly generous salaries and benefits bear little relation to company performance. Recent conceptual and empirical research permits for the first time a truly rigorous debate on these and related issues, which is the subject of this volume.
Author: Joseph P. Weber Publisher: ISBN: Category : Languages : en Pages : 84
Book Description
Recent corporate scandals and subsequent regulatory actions have heightened both the academic communities and the public's interest in corporate governance issues. Academics have long argued that voting rights constitute a critical component of a system of corporate governance. We provide evidence on the importance of one aspect of the firm's corporate governance system, namely shareholders' voting rights, by examining the determinants of the decision to grant equity-based compensation to the employees of the firm with or without shareholder approval. We find that poorly-performing firms and poorly-governed firms are more likely to adopt equity-based compensation plans without shareholder approval. Furthermore, when we examine financial performance subsequent to adoption of equity-based compensation plans, we find that poorly-governed firms that adopt equity-based compensation plans without consulting shareholder do not appear to gain any significant benefits associated with the incentives the plans are supposed to provide. In fact, in the year after an equity-based compensation plan is adopted, these firms perform worse than firms that have good systems of corporate governance or firms that place equity-based compensation plans to a shareholder vote. Overall, our results suggest that shareholder voting rights are an important tool of corporate governance. Keywords: voting rights, corporate governance, regulation, SEC, transparency, accounting, agency theory, stock options, equity based compensation, incomplete contracts, governance. JEL Classifications: G34, J33, D82, M41.
Author: Lucian A. Bebchuk Publisher: Harvard University Press ISBN: 9780674020634 Category : Business & Economics Languages : en Pages : 308
Book Description
The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
Author: Stephan Pietge Publisher: GRIN Verlag ISBN: 3638216802 Category : Business & Economics Languages : en Pages : 86
Book Description
Bachelor Thesis from the year 2003 in the subject Business economics - Investment and Finance, grade: 1.0 (A), Edinburgh Napier University (Business School), language: English, abstract: For several decades academics have been looking for an efficient performance measure, which not only reflects the effectiveness and efficiency of the firm, but also aligns manager′s and shareholder′s interests. Even though many studies question the merit of a single measure for overall firm performance, Stern and Stewart claim to have solved the puzzle with a method labeled Economic Value Added (EVA). This paper examines two aspects: First, EVA′s predicting power regarding stock returns and second, its impact on management behavior as an element of executive compensation. At first glance, Stern and Stewart seem to be right. During the early 1990s their approach gained tremendous popularity, reflected by dozens of anecdotal success stories. Though EVA′s demand of integrating a total capital charge is appealing, the concept is by no means new. The framework of residual income (economic profit), which has been around for decades, also requires a charge for equity capital. Further, some scholars criticize the use of accounting adjustments in order to calculate EVA and its ability to capture performance at the divisional level. So far there is no independent empirical evidence that EVA is superior to accounting measures in predicting stock returns. Some studies even question EVA′s incremental value regarding executive compensation by stating that economic profit is doing as good a job. Consequently, it is tempting to doubt that Economic Value Added indeed adds any value.
Author: Klaudia Blizek Publisher: GRIN Verlag ISBN: 3656071705 Category : Business & Economics Languages : en Pages : 41
Book Description
Seminar paper from the year 2004 in the subject Business economics - Accounting and Taxes, grade: 82/100, course: Business English, language: English, abstract: Governance refers to the processes and structure by which the business and affairs of the company are directed and managed. The primary objective of sound corporate governance is to contribute to improved corporate performance and accountability in creating long term shareholder value. The main objective of this term paper is a brief overview of possibilities to give the board of directors reasons for improving the long term shareholder value. In order to achieve this goal the second chapter of this term paper deals with the concept of corporate governance itself. In taking a closer look at some basic approaches the main tasks and individual and team objectives should be brought out. The third chapter deals with the so-called principal-agent-problem. The essence of the agency-problem is the separation of ownership und control or the conflict of interests among owners and managers. Chapter four introduces remuneration systems which are qualified to solve the agency problem and satisfy both: owners and managers of a company. Finally, chapter five concludes the paper.
Author: Lynn Stout Publisher: Berrett-Koehler Publishers ISBN: 1605098167 Category : Business & Economics Languages : en Pages : 151
Book Description
An in-depth look at the trouble with shareholder value thinking and at better options for models of corporate purpose. Executives, investors, and the business press routinely chant the mantra that corporations are required to “maximize shareholder value.” In this pathbreaking book, renowned corporate expert Lynn Stout debunks the myth that corporate law mandates shareholder primacy. Stout shows how shareholder value thinking endangers not only investors but the rest of us as well, leading managers to focus myopically on short-term earnings; discouraging investment and innovation; harming employees, customers, and communities; and causing companies to indulge in reckless, sociopathic, and irresponsible behaviors. And she looks at new models of corporate purpose that better serve the needs of investors, corporations, and society. “A must-read for managers, directors, and policymakers interested in getting America back in the business of creating real value for the long term.” —Constance E. Bagley, professor, Yale School of Management; president, Academy of Legal Studies in Business; and author of Managers and the Legal Environment and Winning Legally “A compelling call for radically changing the way business is done... The Shareholder Value Myth powerfully demonstrates both the dangers of the shareholder value rule and the falseness of its alleged legal necessity.” —Joel Bakan, professor, The University of British Columbia, and author of the book and film The Corporation “Lynn Stout has a keen mind, a sharp pen, and an unbending sense of fearlessness. Her book is a must-read for anyone interested in understanding the root causes of the current financial calamity.” —Jack Willoughby, senior editor, Barron’s “Lynn Stout offers a new vision of good corporate governance that serves investors, firms, and the American economy.” —Judy Samuelson, executive director, Business and Society Program, The Aspen Institute
Author: Alexander Kostyuk Publisher: Emerald Group Publishing ISBN: 1785606824 Category : Business & Economics Languages : en Pages : 299
Book Description
This book argues for a correct balance between risk and reward and for Directors' remuneration to be equitable to all parties and stakeholders. By examining the current theories, practices and regulations and explaining them in detail it provides a state of the art overview of one of the key corporate governance issues of our time.
Author: Ira T. Kay Publisher: CRC Press ISBN: 104029264X Category : Business & Economics Languages : en Pages : 161
Book Description
U.S. executive pay, particularly that of CEOs, has been under serious attack for nearly a decade. Despite the fact that tying executive performance and pay to stock price has appeared to have substantially benefited the U.S. economy, this criticism has not subsided. CEO Pay and Shareholder Value challenges some assumptions behind this criticism by addressing these pertinent questions and more:
Author: Arne Wolter
Author: Arne Wolter
Author: Jennifer Carpenter
Author: Joseph P. Weber
Author: Lucian A. Bebchuk
Author: Samuel Ray Gray
Author: Stephan Pietge
Author: Klaudia Blizek
Author: Lynn Stout
Author: Alexander Kostyuk
Author: Ira T. Kay