Three Essays on Executive Compensation - KOPS - Universität ...

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Profit Sharing with Executives Table 3.3: Determinants of the Top Management’s Cash-Flow Share CR BR Capital intensity -4.133*** -4.346*** (-6.49) (-5.13) R&D intensity 0.433 -0.875 (0.71) (-1.11) Market-to-book -0.0174* -0.0044 (-1.74) (-0.40) Sales growth -0.0213 -0.0144 (-1.18) (-0.69) Interest -11.94*** -9.363*** (-4.65) (-2.60) Leverage 0.0102 0.0068 (1.51) (0.77) Dividends -8.576*** -15.57*** (-3.40) (-3.89) Dividend payout ratio 0.492*** 0.559*** (3.93) (4.86) Long-term incentives -1.137*** -1.488*** (-12.24) (-13.86) Firm size -0.0001*** -0.0001*** (-12.73) (-8.36) Stock return 0.130* 0.306*** (1.95) (4.20) Profitability -1.254*** 0.149 (-4.00) (0.31) Cash flow volatility - 0.0035*** (2.64) 2006 -0.0195 0.0674 (-0.23) (0.56) 2007 -0.101 -0.0331 (-1.33) (-0.31) 2008 -0.0390 0.105 (-0.47) (0.92) 2009 -0.318*** -0.400*** (-3.79) (-3.73) Industry dummies yes yes Observations 3859 3859 The dependent variables in columns one and two are the top management’s cash-flow share based on total cash compensation (cash ratio, CR) and cash bonuses (bonus ratio, BR), respectively. All estimates are based on QMLE estimation developed by Papke and Wooldridge (1996). Explanatory variables are defined in Table 3.2. All monetary variables are adjusted for inflation. All regressions include year and industry dummies. z-values in parentheses are calculated as coefficient estimates over robust standard errors. Significance levels of 1, 5 and 10 percent are indicated by ***, **, *, respectively. 151
Profit Sharing with Executives Table 3.4: Economic Significance CR BR ∆ SDx ∆ SDx/SDy ∆ SDx ∆ SDx/SDy Capital intensity -0.0038*** -0.0773*** -0.0022*** -0.0753*** (-6.21) (-6.21) (-5.01) (-5.01) R&D intensity 0.0004 0.0071 -0.0004 -0.0134 (0.71) (0.71) (-1.10) (-1.10) Market-to-book -0.0012* -0.0244* -0.0002 -0.0058 (-1.72) (-1.72) (-0.40) (-0.40) Sales growth -0.0002 -0.0050 -0.0001 -0.0031 (-1.18) (-1.18) (-0.70) (-0.70) Interest -0.0023*** -0.0459*** -0.0010** -0.0333** (-4.51) (-4.51) (-2.59) (-2.59) Leverage 0.0004 0.0082 0.0001 0.0051 (1.50) (1.50) (0.77) (0.77) Dividends -0.0042*** -0.0853*** -0.0041*** -0.1432*** (-3.30) (-3.30) (-3.80) (-3.80) Dividend payout ratio 0.0030*** 0.0603*** 0.0022*** 0.0771*** (3.81) (3.81) (4.70) (4.70) Long-term incentives -0.0045*** -0.0901*** -0.0032*** -0.1092*** (-10.45) (-10.45) (-13.04) (-13.04) Firm size -0.0325*** -0.6565*** -0.0088*** -0.3036*** (-21.49) (-21.49) (-9.76) (-9.76) Stock return 0.0010* 0.0209* 0.0013*** 0.0454*** (1.94) (1.94) (4.22) (4.22) Profitability -0.0019*** -0.0385*** -0.0001 -0.0042 (-4.00) (-4.00) (-0.31) (-0.31) Cash flow volatility - - 0.0003*** 0.0116*** (2.63) (2.63) Year dummies yes yes yes yes Industry dummies yes yes yes yes Observations 3859 3859 3859 3859 Based on the estimates in Table 3.3, columns one and three show the calculated effect of a 1-standard deviation change in x k on CR and BR, respectively, with x l evaluated at its mean ∀l ≠ k. For example, in firms with capital intensity of 1 standard deviation above the average, the top management’s cash-flow share is 0.4 percentage points below the average (3.2 percent, see Table 3.1). Columns two and four show how much of a 1-standard deviation variation in CR and BR, respectively, is explained by a 1-standard deviation change in x k . This effect is calculated by dividing the estimates in columns one and three by 1 standard deviation of CR and BR, respectively. For example, variation of 1 standard deviation in capital intensity explains about 7.7 percent of a 1-standard deviation variation in CR. z-values in parentheses are calculated as coefficient estimates over robust standard errors. Significance levels of 1, 5 and 10 percent are indicated by ***, ** and *, respectively. 152
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Three Essa
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Contents Vorwort Contents List of T
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CONTENTS 3.5.1 Determinants of the
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LIST OF TABLES 2.9 Cash Bonuses and
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Summary Chapter 1, Executive Compen
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Summary top management’s cash-flo
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Executive Compensation and Firm Per
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