Managerial incentives and investment policy in family firms: evidence from a structural analysis

This paper provides evidence that CEO incentive pay mediates the effect of family preferences on corporate investment policy. Our study focuses on the option portfolio volatility sensitivity vega, which motivates the risk-taking behavior of undiversified managers. After controlling for factors that affect incentive pay and investment policy simultaneously, we find that one-third of underinvestment in riskier R&D projects in active family firms can be attributed to a significantly lower vega. Passive family firms allocate more capital to R&D as opposed to active family firms, and are more active in M&A deal making. In contrast to many prior studies, pay incentives and families are not associated with capital expenditures. Overall, our empirical results suggest that CEO pay incentives induce investment policy contingent on firm risk. Family CEO incentive pay manifests the family preference for lower risk, especially in firms with higher firm risk. Nonetheless, after replacing family CEOs with outside professionals, investments in both R&D and M&A increase, which is consistent with the family preference for extended investment horizons. Interestingly, such a preference seems not to be manifested in incentive pay

Deprivation, social class and social mobility at Big Four and non-Big Four firms

Using the work of Bourdieu and Savage, this paper investigates social class and social mobility among chartered accountants who qualified with The Institute of Chartered Accountants of Scotland in 2009. We find that these accountants tend to come from privileged backgrounds and that those who qualified with Big Four firms possess more economic, social and cultural capital than those who qualify with other firms. Our study provides fresh insights into how elements of social class interact with social background. In contrast with the prevailing view that there is limited social mobility in the accountancy profession, we find some evidence of social mobility, suggesting that current debates are based on contestable assumptions. We also find that chartered accountants from more deprived backgrounds as indicated by childhood postcode often have a father who has a professional or managerial occupation, so are not deprived on all measures. Where those from more deprived backgrounds accessed chartered accountancy careers, this was at the expense of people whose parents held lower rather than higher professional or managerial jobs. This suggests that the most advantaged maintain access to chartered accountancy but those from more middling professional homes are displaced when those from more deprived backgrounds gain access

"Say on Pay” regulations and director remuneration: evidence from the UK in the past two decades

The UK was the first country to introduce so-called ‘say on pay’ regulation in 2002, by providing shareholders with an advisory vote on the Directors’ Remuneration Report. That approach recognised that disclosure alone was not an adequate regulatory response to the widening gap between directors’ pay and company performance nor to the broader political concern over the implications of this trend for social solidarity. A second stage in the evolution of the regime began in 2013 when shareholders were granted a binding vote on remuneration policy. In this article we present the results of the first longitudinal survey of the entire phase of ‘say on pay’ regulation in the UK to date. We examine the link between each stage of ‘say on pay’ regulation and the level and growth of directors’ remuneration. We conclude by linking our empirical evidence to broader developments in shareholder engagement with listed companies