1,721,027 research outputs found
Benchmarking CEO compensation: developing a model for different business strategies
No full textPorter's generic business strategies of cost leadership and differentiation were adjusted to make them applicable to CEO compensation strategies. The cost leadership strategy equates to a firm that attempts to signal that their CEO is not over paid, not reaping off much of the profits, but is compensated according to best practices. The differentiation strategy relates to a firm that believes it is important to signal that their CEO is above average and therefore should earn an above average compensation. The purpose of the study was to develop a data envelopment analysis (DEA) model with two stages. The first provides a best practice frontier to benchmark segments of CEO compensation against determiners thereof, including firm-, CEO- and governance characteristics. Firms with different strategies will then position themselves differently to the best practice frontier. Irrespective of the strategy chosen at the first stage, the second stage estimates how efficient firms are to convert the above-mentioned determiners into multiple performance measures. The contribution of the study is that employing such a model may change the philosophy of how firms look at CEO compensation, for example firms whose CEOs are at the bottom half are not necessarily below average or underpaid, but signal that their CEOs are compensated according to best practices
The efficiency of South African mining companies to create shareholder and stakeholder value from enivronmental exploitation
No full textThe aim of the study is to estimate the relative efficiency of nine South African mining companies in converting their environmental impact into shareholders’ gains and stakeholders’ gains. A data envelopment analysis model was used to estimate the relative technical efficiency of the companies in converting environmental impact factors (greenhouse gas emissions, water usage and energy usage) into shareholder gains (EBITDA, dividends and reinvestments). Another model was used to estimate how these environmental impact factors are converted into stakeholders’ gains (number of employees, taxes, donations and payments to suppliers of goods and services). The study found that all the companies in the selected sample perform relatively more efficiently in creating stakeholder gains than shareholder gains from the exploitation of the environment.http://studiaoeconomica.ubbcluj.ro
Employees' perceptions of safety control mechanisms and production cost at a mine
No full textThe purpose of this study is to determine whether the requirements of safety legislation are observed and complied
with by a single colliery in South Africa and its employees to ensure safety and maintain an accident-free working
environment. From the literature, a framework including the following four main components is identified:
(1) organizational adherence or compliance to safety legislation, (2) employees’ compliance regarding the application
of safety control mechanisms, (3) employees’ attitude towards safety control, and (4) production cost’s relation to
safety control mechanisms. An analysis of organizational safety control mechanisms and production cost is conducted
through the use of a structured questionnaire, completed by 151 participants. Descriptive statistics, exploratory factor
analysis (EFA) and one-way analysis of variance (ANOVA) are utilized to analyze the perceptions of participants. The
contribution of the study is that an enhanced safety control questionnaire is developed with a greater emphasis on
production costs; the above-mentioned four-component framework is refined into nine managerial factors; and
statistically significant differences between the perceptions of different classes of labor (departments) are revealed
A Model To Estimate Firms Accounting-Based Performance: A Data Envelopment Approach
Full text linkThe objective of the study was to follow a logical inductive approach to develop a Data Envelopment Analysis (DEA) model to estimate the relative technical efficiency of firms. The Du Pont analysis theory as conceptual framework was applied using primarily readily available accounting line-items as input and output variables. From an interpretive epistemological paradigm and analytical reasoning, a new DEA model was developed with Weighted Average Cost of Capital (WACC), leverage and expenditure as input variables and revenue, net profit and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) as output variables. The originality of this study is that this is the first effort to employ accounting data, based on the Du Pont analysis in a DEA model. All the input and output variables in the model were already used individually or in combinations by previous studies, except for WACC. The study argues that WACC should be employed as a proxy for the accounting line-items, equity and liabilities, since lowering WACC implies that firms are moving closer to their optimal capital structures
A Model to Compare Firms' Efficiency in Creating Shareholders' Value
No full textThe first objective of this study is to develop a Data Envelopment Analysis (DEA) model to determine the relative technical efficiency of firms to create shareholders' value. The second objective is to compare the technical efficiency with the profit ratios in the Du Pont analysis to determine whether there are some consistencies between these two measures of performance. Data of 33 JSE Limited listed manufacturing companies were used over a five-year period. The study found that there is a significant monotone dependence between the annual technical efficiency and the return on equity of companies. The practical implication of the study is that it provides a functional model that indicates an aggregated judgement of a firm's efficiency of using resources to create shareholders' value, and, the readily available return on equity can be used as a substitute to technical efficiency, which is more complicated to calculate. The value of this study is that it is the first to apply a unique DEA model for profit-motive companies
A non-parametric comparison among firms’ income statement-based and balance sheet-based performance
Full text linkThe purpose of the study is to create an income statement-based and a balance sheet-based data envelopment analysis (DEA) model, and to demonstrate these models on Johannesburg Stock Exchange (JSE) listed firms and to compare the technical and scale efficiencies of firms among the two models. A convenience sample of 51 JSE-listed industrial companies over a three year period was selected. The practical value of this modeling exercise is that corporate managers can become conscious that, although the income statement and balance sheet performances tend to be related, there is evidence of a significant gap between firms performance according to these measurements.http://www.cluteinstitute.com/ojs/index.php/IBER/article/view/8183http://www.cluteinstitute.com/journals/international-business-economics-research-journal-iber
The relationship between company size and ceo remuneration: a scaling perspective
No full textThe first objective of the study is to empirically test a number of company size determinants’ significance as size proxies in benchmarking CEO remuneration for different sectors of Johannesburg Stock Exchange (JSE)-listed companies. The second objective is to investigate an issue that has not been examined in previous studies, namely the extent to which companies are able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. To fulfil the first objective, data extracted from the McGregor BFA database were obtained for 2013, where 244 companies in four sectors, i.e. financial, manufacturing, minerals and services, are analysed using descriptive statistics and simple regression analysis. From the results obtained, to fulfil the second objective, a data envelopment analysis (DEA) model is built to estimate the technical and scale efficiencies of 231 companies. A hypothesis test was helpful to find that the following determinants can be used as proxies for company size: total assets (including intangible assets); market value of assets; total equity; market capitalisation; revenue; and total cost. The confidence level to which the null-hypothesis is rejected leads to the conclusion that those determinants are on their own suitable proxies that make further investigations into joint determinants unnecessary. Furthermore, the study concluded that the majority of companies are not able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. Therefore, the conceptual theory of scaling is to a great extent rejected, since only nine of 231 companies in the sample investigated could achieve economies of scale. The paper is organised as follows: Section I provides the gap of missing knowledge in the literature as well as the conceptual framework of the study. The data and methodology are described in Section II, after which the results and a discussion thereof are provided in Section III. The study is finally concluded in Section IV.http://www.virtusinterpress.org/-Corporate-Ownership-and-Control-.htm
The interrelationship between different performance estimates
No full textThe main purpose of the study is to investigate the interrelationship of the following four performance estimates: Technical efficiency, by using Data Envelopment Analysis; financial soundness, by using Altman's revised Z''(EM)-model for emerging markets; financial ratios, using return on equity as an internal measure; and price/book value as an external measure. Annual financial statement data were used in two samples for 55 manufacturing companies listed on the JSE Limited (Johannesburg Stock Exchange) over a six-year period in a cross-sectional analysis. The study found that only the relationship between technical efficiency and return on equity was significant for all six years under review for both samples. The study concluded that no single performance estimate is able to replace all the other estimates. Further research should be done to determine which of these estimates provide the most sensible and accurate information to managers
Benchmarking Of Johannesburg Stock Exchange CEO Compensation
Full text linkThe purpose of the study is to empirically compare CEO compensation benchmarks set by the frequently used Linear Regression Analysis (LRA), which is based on “averages” and Data Envelopment Analysis (DEA), which is based on “best practices”. To fulfill this purpose, an empirical investigation on South African listed companies was executed using a sample of 187 Johannesburg Stock Exchange (JSE) companies, grouped into three categories according to their sizes by using total assets, i.e. large, medium and small companies. For the LRA model, total CEO compensation is the dependent variable (y) with return on equity (as a measurement of performance) and total assets (as measurement of company size) as the independent variables (x). In the LRA model, the expected CEO compensation was calculated as a benchmark for each company and then compared to the actual value of the CEO compensation. In the DEA model, total CEO compensation is the input variable and return on equity and total assets the two output variables. The input-orientated technical efficiency estimate was calculated and the input targets (benchmarks for CEO compensation) set by the DEA model were compared to the actual CEO compensation. The study found that, using the LRA model, CEOs are on average actually underpaid in monetary terms by 36.8%, 33.2% and 17.8% for the large, medium and small companies, respectively. In contrast, the results for these three groups using DEA have shown that CEOs are on average actually overpaid in monetary terms by 47.6% 55.3% and 49.9%. This implies that LRA favors CEOs in comparison with the DEA model. Therefore, the study concludes that the frequently used LRA model is probably a reason that contributes to excessive CEO compensation
An application of data envelopment analysis to benchmark CEO remuneration: a South African study
Full text linkThe purpose of the study is twofold; firstly, to use data envelopment analysis (DEA) to estimate the technical efficiencies of Johannesburg Stock Exchange (JSE)-listed companies (per industry) to convert the multiple components of CEO remuneration into multiple company determinants, namely size and performance indicators, and secondly, to develop an efficiency frontier to serve as a benchmark to suggest acceptable CEO remuneration levels. An empirical study was executed on a sample of 221 JSE-listed companies. Cross-sectional data of CEO remuneration and company determinants were obtained from the McGregor BFA database for the 2010 financial year. The study found that CEOs from 80 of the 221 companies included in the sample emerged as the benchmark CEOs and formed the efficiency frontier against which inefficient CEOs were compared. The practical value is that remuneration committees can use this model, which is based on best practices, to simplify the structuring of reasonable CEO remuneration packages.http://www.cluteinstitute.com/ojs/index.php/JABR/article/view/8032/8086http://www.cluteinstitute.com/journals/journal-of-applied-business-research-jabr
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