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

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.
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