- Volume 15 Issue 1
DOI QR Code
The Corporate Life Cycle and Management Compensation
기업수명주기와 경영자 보상
- Kim, Ji-Hye (Business School, Korea University) ;
- Kim, Jin-bae (Business School, Korea University) ;
- Choi, Jeong-mi (Dept. of Accounting, Cheongju University)
- Received : 2016.11.30
- Accepted : 2017.01.20
- Published : 2017.01.28
The purpose of this study investigates the relation between corporate life cycle and management compensation. The analysis is performed by comparing the compensation level and pay-performance-sensitivity (PPS) at each life cycle based on Korean data from 2003 to 2014. The results show that regarding compensation level, mature stage has the highest mean value of compensation and compensation level drops after mature stage. In introduction stage, growth and decline stages, compensation is not sensitive to accounting performance. In a while, in mature stage, management compensation varies with accounting performance more significantly than stock performance. In additional analysis, the results indicate that the finding is not designated from growth opportunities and the relation differs when the firm is included in a conglomerate. These findings contribute to the literature by providing additional evidence to understand for compensation and the corporate life cycle studies.
- Wang, G., and P. Singh, "The evolution of CEO compensation over the organizational life cycle: A contingency explanation." Human Resource Management Review, Vol24, No.2, pp.144-159, 2014. https://doi.org/10.1016/j.hrmr.2013.11.001
- Anthony, J. H., and K. Ramesh, "Association between accounting performance measures and stock prices: A test of the life cycle hypothesis." Journal of Accounting and Economics, Vol15, pp.203-227, 1992. https://doi.org/10.1016/0165-4101(92)90018-W
- Cameron, K. S., Kim, M. U., and Whetten, D. A. "Organizational effects of decline and turbulence." Administrative Science Quarterly, Vol.32, pp.222-240, 1987. https://doi.org/10.2307/2393127
- Kazanjian, R. K., and Drazin, R. "An empirical test of a stage of growth progression mode" Management Science, Vol.35, pp.1489-1504, 1989. https://doi.org/10.1287/mnsc.35.12.1489
- Holmstrom, Bengt, "Moral Hazard and Observability", Bell Journal of Economics (Spring), pp.74-91, 1979.
- Drake, Katharine D. and Martin, Melissa, "Executive Compensation: A Firm Life Cycle Analysis", Working paper, 2015.
- Dickinson, V., "Cash Flow Patterns as a Proxy for Firm Life Cycle." The Accounting Review, Vol.86, pp.1969-1994, 2011. https://doi.org/10.2308/accr-10130
- Boston Consulting Group, "Perspectives on experience." Boston, M,A, 1968.
- Black, L. E., "Life-cycle impacts on the incremental value-relevance of earnings and cash flow measures." Journal of Financial Statement Analysis, Vol.4, pp.40-56, 1998.
- Hribar, P. and N. Yehuda, "Life Cycle, Cost of Capital, Earnings Persistence and Stock Returns." Working Paper, Cornell University, 2007.
- J. M. Choi. "Managerial Ownership and Debt Choice", Journal of Digital Convergence, vol. 11, no. 4, pp.177-188, 2013. https://doi.org/10.14400/JDPM.2013.11.11.177
- Y. M. Choi. "Manageral stock ownership and debt maturity", Journal of the Korea Convergence Society vo1. 6, no.1, pp.71-76, 2015. https://doi.org/10.15207/JKCS.2015.6.1.071
- Devers, C., Cannella, A., Reilly, G., and Yoder, M., "Executive compensation: A multidisciplinary review of recent developments." Journal of Management, Vol. 33, pp.1016-1072, 2007.
- Tosi, H. L., Werner, S., Katz, J. P., and Gomez-Mejia, L. R., "How much does performance matter? A meta-analysis of CEO pay studies." Journal of Management, Vol26, pp.301-339, 2000.
- D. I.. Kim. "Anaysis on chinese companies with introduction of the IFRS and the conservatism Freatures", Journal of Digital Convergence. vol. 14, no. 8, pp.105-113, 2016. https://doi.org/10.14400/JDC.2016.14.8.105
- K. H. Kim and D. W. Yang., "A study on the effect of CEO ethics on the business performance of company: Focusing on construction companies", Journal of Digital Convergence. vol. 14, no. 4, pp.173-183, 2016. https://doi.org/10.14400/JDC.2016.14.4.173
- Miller, D., and Friesen, P. H., "A longitudinal study of the corporate life cycle." Management Science, Vol.30, pp.1161-1183, 1984. https://doi.org/10.1287/mnsc.30.10.1161
- Madhani, P. M., "Optimal compensation: Rebalancing pay." SCMS Journal of Indian Management, Vol.9, pp.31-42, 2012.
- Salimath, M., Cullen, J., and Umesh, U., "Outsourcing and performance in entrepreneurial firms: Contingent relationships with entrepreneurial configurations." Decision Sciences, Vol.39, pp.359-381, 2008. https://doi.org/10.1111/j.1540-5915.2008.00196.x
- Kanagaretnam, K., Lobo, G., and Mohammad, E., "Are stock options grants to CEOs of stagnant firms fair and justified?" Journal of Business Ethics, Vol.90, pp.137-155, 2009. https://doi.org/10.1007/s10551-009-0033-0
- Hirschey, M., and Pappas, J. L. "Regulatory and life cycle influences on managerial incentives." Southern Economic Journal, Vol.48, pp.327-334, 1981. https://doi.org/10.2307/1057933
- Y. Hwang and S. H. Park. "The evolution of alliance formation in biotech firms: An organisational life cycle framework." Management Dynamics, Vol.15, 40-53, 2006.
- Lester, D. L., Parnell, J. A., Crandall, W., and Menefee, M. "Organizational life cycle and innovation among entrepreneurial enterprises." Journal of Small Business Strategy, Vol.19, pp.37-49, 2008.
- Lynall, M., Golden, B., and Hillman, "A. Board composition from adolescence to maturity: A multi-theoretic view." Academy of Management Review, Vol.28, pp.416-431, 2003. https://doi.org/10.5465/amr.2003.10196743
- Singh, P., and Agarwal, N. C., "Executive compensation: Examining an old issue from new perspectives." Compensation and Benefits Review, Vol.35, pp.48-54, 2003. https://doi.org/10.1177/0886368703251169
- Smith, K. G., Mitchell, T. R., and Summer, C. E., "Top level management priorities in different stages of the organizational life cycle." Academy of Management Journal, Vol.28, pp.799-820, 1985. https://doi.org/10.2307/256238
- Smith, C. W., and R. L. Watts, "The Investment Opportunity Set and Corporate Financing, Dividend, and Financing Policies." Journal of Financial Economics, Vol.32, pp.262-292, 1992.
- Stephen, Cheong, and Woochan Kim, "Revisiting Executive Pay in Family-Controlled Firms: Family Premium in Large Business Groups," ECGI Working Paper No. 441., 2014.
- Jin Bae Kim, Gun Lee, Min Young Lee, "CEO transfer within business group and firm performance.."Working paper, 2013.
- Hyungseok Kim and Woochan Kim, "Executive compensation: When a firm is a business group member," ECGI Working paper, 2015.