The purpose of this paper is to examine the determinants of the increase in firms’ reporting of alternative pay measures in Pay for Performance disclosures and their role in…
Abstract
Purpose
The purpose of this paper is to examine the determinants of the increase in firms’ reporting of alternative pay measures in Pay for Performance disclosures and their role in subsequent Say on Pay approval.
Design/methodology/approach
This study explores the most common types of supplemental compensation disclosures used in Pay for Performance discussions using a hand-collected sample of S&P 500 proxy statements from 2012-2014. The sample compares key characteristics of firms reporting “pocketed” pay, “market-value” pay, and “peer comparison” percentile ranking pay compared to firms that do not use these alternatives.
Findings
Results suggest that firms use alternative pay measures in their Pay for Performance disclosures for different reasons. While “pocketed” pay reporters show characteristics of opportunistic disclosures and “peer comparison” reporters tend toward informative disclosure, there is often a significant positive impact of disclosing additional compensation information on Say on Pay approval when combating prior poor Say on Pay support. However, the effect seems most significant for peer comparisons, indicating the value of reporting comparative pay.
Originality/value
This study provides insights into the increasing use of alternative pay measures, and through these measures, identifies an additional mechanism of firms’ responses to Say on Pay votes. In addition, this study highlights the importance of standardized Pay for Performance disclosures to improve informativeness and comparability in financial reporting across firms. Finally, the study provides additional evidence of opportunistic disclosure by firms in order to preserve executive pay.
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Karen Ann Craig and Brandy Hadley
This paper aims to investigate the political cost hypothesis and the effects of political sensitivity-induced governance in the US bond market by using yield spreads from bonds…
Abstract
Purpose
This paper aims to investigate the political cost hypothesis and the effects of political sensitivity-induced governance in the US bond market by using yield spreads from bonds issued by a diverse sample of US government contractors.
Design/methodology/approach
Fixed effects regression analysis is used to test the relation between the political sensitivity of government contractor firms and their cost of debt.
Findings
Results illustrated that government contractors with greater political sensitivity are associated with larger yield spreads, indicating that bondholders require a premium when firms endure the costs of increased political oversight and the threat of outside intervention, reducing the certainty of future income. However, despite the overall positive impact of political sensitivity on bond yield spreads on average, the authors found that the additional government oversight is associated with lower spreads when the firm is facing greater repayment risk.
Practical implications
Despite the benefits of winning a government contract, this paper identifies a direct financial cost of increased political sensitivity because of additional firm oversight and potential intervention. Importantly, it also finds that this governance is valued by bondholders when faced with increased risk. Firms must balance their desire for government receipts with the costs and benefits of dependence on those expenditures.
Originality/value
This paper contributes to the literature in its exploration of political sensitivity as an important determinant of the cost of debt for corporate government contractors. Specifically, the authors document a significant risk premium in bond pricing because of the joint effects of the visibility and importance of government contracts to the firm.
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A point repeatedly brought forward for the defence, or at all events for the purpose of mitigating the fine, in adulteration cases, is the statement that defendant's goods have…
Abstract
A point repeatedly brought forward for the defence, or at all events for the purpose of mitigating the fine, in adulteration cases, is the statement that defendant's goods have been analysed on former occasions and have been found genuine. As illustrating the slight value of analyses of previous samples may be taken the average laudatory analyses on patent or proprietary foods, drinks, or medicine. The manufacturer calculates—and calculates rightly—that the general public will believe that the published analysis of a particular specimen which had been submitted to the analytical expert by the manufacturer himself, guarantees all the samples on the market to be equally pure. History has repeatedly proved that in 99 cases out of 100 the goods found on the market fall below the quality indicated by the published analyses. Not long ago a case bearing on this matter was tried in court, where samples of cocoa supplied by the wholesale firm were distributed; but, when the retailer tried to sell the bulk of the consignment, he had repeated complaints from his customers that the samples were a very much better article than what he was then supplying. He summoned the wholesale dealer and won his case. But what guarantee have the general public of the quality of any manufacturer's goods—unless the Control System as instituted in Great Britain is accepted and applied ? Inasmuch as any manufacturer who joins the firms under the British Analytical Control thereby undertakes to keep all his samples up to the requisite standard; as his goods thenceforth bear the Control stamp; and as any purchaser can at any time submit a sample bought on the open market to the analytical experts of the British Analytical Control, free of any charge, to ascertain if the sample is up to the published and requisite standard, it is plain that a condition of things is created which not only protects the public from being cheated, but also acts most beneficially for these firms which are not afraid to supply a genuine article. The public are much more willing to buy an absolutely guaranteed article, of which each sample must be kept up to the previous high quality, rather than one which was good while it was being introduced, but as soon as it became well known fell off in quality and continued to live on its reputation alone.
Inspections have been made during the year at the majority of the principal food importing ports in England and Wales in connection with the administration of the Public Health…
Abstract
Inspections have been made during the year at the majority of the principal food importing ports in England and Wales in connection with the administration of the Public Health (Foreign Meat) and the Public Health (Unsound Food) Regulations, 1908.
The March issue of the Journal of Chemical Technology contains the following article, with every word of which we cordially agree. It is gratifying to find that there is one—if…
Abstract
The March issue of the Journal of Chemical Technology contains the following article, with every word of which we cordially agree. It is gratifying to find that there is one—if only one—of our scientific Journals which has the courage and the patriotism to speak out and to do so in vigorous terms. The indictment of the flabby persons belonging to the Chemical Profession who by their ineptitude and inertia are condoning the bestial crimes of the modern Huns is well‐timed and thoroughly deserved.
Julie Stubbs, Sophie Russell, Eileen Baldry, David Brown, Chris Cunneen and Melanie Schwartz
Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way…
Abstract
Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way of using the law in specific circumstances, and shows the variations therein. Sums up that arbitration is much the better way to gok as it avoids delays and expenses, plus the vexation/frustration of normal litigation. Concludes that the US and Greek constitutions and common law tradition in England appear to allow involved parties to choose their own judge, who can thus be an arbitrator. Discusses e‐commerce and speculates on this for the future.
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In considering this subject, it is desirable to consult, and to go by, official documents and any comments made thereon by competent and unprejudiced persons who are recognised as…
Abstract
In considering this subject, it is desirable to consult, and to go by, official documents and any comments made thereon by competent and unprejudiced persons who are recognised as authorities in their special line. In this connection it will be best to take, first, the text of the latest Imperial law as it stands (which is very explicit in regard to what is permitted and to what is not permitted to be done), secondly, the still more explicit official instructions as to how this law is to be carried out and enforced, and, thirdly, the comments of experts on the subject in some standard book intended for public guidance. Such a book is No. 68 of the well‐known Guttentag Law Series, edited by Doctors Lebbin and Baum.
WE begin a new year, in which we wish good things for all who work in libraries and care for them, in circumstances which are not unpropitious. At times raven voices prophesy the…
Abstract
WE begin a new year, in which we wish good things for all who work in libraries and care for them, in circumstances which are not unpropitious. At times raven voices prophesy the doom of a profession glued to things so transitory as books are now imagined to be, by some. Indeed, so much is this a dominant fear that some librarians, to judge by their utterances, rest their hopes upon other recorded forms of knowledge‐transmission; forms which are not necessarily inimical to books but which they think in the increasing hurry of contemporary life may supersede them. These fears have not been harmful in any radical way so far, because they may have increased the librarian's interest in the ways of bringing books to people and people to books by any means which successful business firms use (for example) to advertise what they have to sell. The modern librarian becomes more and more the man of business; some feel he becomes less and less the scholar; but we suggest that this is theory with small basis in fact. Scholars are not necessarily, indeed they can rarely be, bookish recluses; nor need business men be uncultured. For men of plain commonsense there need be few ways of life that are so confined that they exclude their followers from other ways and other men's ideas and activities. And, as for the transitoriness of books and the decline of reading, we ourselves decline to acknowledge or believe in either process. Books do disappear, as individuals. It is well that they do for the primary purpose of any book is to serve this generation in which it is published; and, if there survive books that we, the posterity of our fathers, would not willingly let die, it is because the life they had when they were contemporary books is still in them. Nothing else can preserve a book as a readable influence. If this were not so every library would grow beyond the capacity of the individual or even towns to support; there would, in the world of readers, be no room for new writers and their books, and the tragedy that suggests is fantastically unimaginable. A careful study, recently made of scores of library reports for 1951–52, which it is part of our editorial duty to make, has produced the following deductions. Nearly every public library, and indeed other library, reports quite substantial increases in the use made of it; relatively few have yet installed the collections of records as alternatives to books of which so much is written; further still, where “readers” and other aids to the reading of records, films, etc., have been installed, the use of them is most modest; few librarians have a book‐fund that is adequate to present demands; fewer have staffs adequate to the demands made upon them for guidance by the advanced type of readers or for doing thoroughly the most ordinary form of book‐explanation. It is, in one sense a little depressing, but there is the challenging fact that these islands contain a greater reading population than they ever had. One has to reflect that of our fifty millions every one, including infants who have not cut their teeth, the inhabitants of asylums, the illiterate—and, alas, there are still thousands of these—and the drifters and those whose vain boast is that “they never have time to read a book”—every one of them reads six volumes a year. A further reflection is that public libraries may be the largest distributors, but there are many others and in the average town there may be a half‐dozen commercial, institutional and shop‐libraries, all distributing, for every public library. This fact is stressed by our public library spending on books last year at some two million pounds, a large sum, but only one‐tenth of the money the country spent on books. There are literally millions of book‐readers who may or may not use the public library, some of them who do not use any library but buy what they read. The real figure of the total reading of our people would probably be astronomical or, at anyrate, astonishing.
Are business outcomes due primarily to entrepreneurial and managerial ability or are they mainly the result of business content? The purpose of this study is to explore this…
Abstract
Purpose
Are business outcomes due primarily to entrepreneurial and managerial ability or are they mainly the result of business content? The purpose of this study is to explore this question by comparing the railroads of Victoria and Queensland (Australia) and the South-West and Northern Plains of America between 1881 and 1900. Given the commonalities of the four railway systems in terms of their economic orientation towards rural custom, and their marked difference in terms of ownership, one would expect similarities in their financial circumstances if outcomes were primarily determined by fluctuations in global commodity markets. Conversely, marked differences would be expected if outcomes primarily resulted from managerial initiative.
Design/methodology/approach
Conceptually, this study is informed by the idea that social and economic outcomes are shaped by long historical movements, with meaningful structural change occurring rarely but to great effect. In exploring this concept through a comparison of the railways of Australia and the American West, the study draws on two forms of archival evidence. One source of evidence relates to railroad management, operations and finances. Figures cited come primarily from Australian railway commissioners’ reports and Poor’s Manual of the Railroads of the USA. The other source of evidence relates to agricultural statistics. These are drawn from official reports.
Findings
This study argues that effective strategic decision-making can only occur if we understand the structural changes that alter our world. In the late nineteenth century, the Australian and American railroads servicing newly settled rural regions were financial failures because management failed to appreciate the structural changes that the revolution in steam-powered transport had initiated; a revolution which resulted in commodity prices – and hence, the railway rates for farm produce – being determined by global demand and supply balances rather than by local factors. As a result, they continued a policy of expansion that was no longer financially justified.
Originality/value
This study seeks to contribute to a fundamental debate in historical studies and management about the drivers of social and economic change. Increasingly, there is acceptance of the view that historical circumstances are inherently unstable and what counts is the particular change cascading through a myriad of “events”. This study points in a contrary direction, suggesting that business outcomes are primarily determined by deep structural shifts that can be understood and steered but seldom opposed.