Bank performance and executive pay: tournament or teamwork

We investigate the relationship between the dispersion of executive pay and bank performance/valuation by examining two competing theories, the tournament theory (hierarchical wage structure) and the equity fairness theory (compressed wage structure). The key variable of executive pay dispersion is measured using a hand-collected dataset composed of 63 banks from OECD countries and 29 banks from developing countries. The dataset covers the period 2004 to 2012. By combining and modifying a translog profit function and a pay-dispersion model, we are able to address the potential problems of relying on reduced-form estimation. In our subsample of developed and civil law countries, where bank performance is measured by either Tobin’s Q or by the price-to-book ratio, the overall impact of executive pay dispersion is mostly negative, and we find supporting evidence for the equity fairness theory, except for very high levels of dispersion. There is a non-linear effect, as banks perform best when there is either very low or very high executive pay dispersion. For developing country sample banks, greater executive pay dispersion has a negative impact on bank profit. In our subsample of common law countries, however, we find no evidence of a significant impact of executive pay dispersion on bank performance. We conclude that lower executive pay dispersion, a proxy for teamwork, is mostly effective in enhancing bank performance in a significant section of sample banks, i.e., civil law and developing countries

Review of methods used by chiropractors to determine the site for applying manipulation

Background: With the development of increasing evidence for the use of manipulation in the management of musculoskeletal conditions, there is growing interest in identifying the appropriate indications for care. Recently, attempts have been made to develop clinical prediction rules, however the validity of these clinical prediction rules remains unclear and their impact on care delivery has yet to be established. The current study was designed to evaluate the literature on the validity and reliability of the more common methods used by doctors of chiropractic to inform the choice of the site at which to apply spinal manipulation. Methods: Structured searches were conducted in Medline, PubMed, CINAHL and ICL, supported by hand searches of archives, to identify studies of the diagnostic reliability and validity of common methods used to identify the site of treatment application. To be included, studies were to present original data from studies of human subjects and be designed to address the region or location of care delivery. Only English language manuscripts from peer-reviewed journals were included. The quality of evidence was ranked using QUADAS for validity and QAREL for reliability, as appropriate. Data were extracted and synthesized, and were evaluated in terms of strength of evidence and the degree to which the evidence was favourable for clinical use of the method under investigation. Results: A total of 2594 titles were screened from which 201 articles met all inclusion criteria. The spectrum of manuscript quality was quite broad, as was the degree to which the evidence favoured clinical application of the diagnostic methods reviewed. The most convincing favourable evidence was for methods which confirmed or provoked pain at a specific spinal segmental level or region. There was also high quality evidence supporting the use, with limitations, of static and motion palpation, and measures of leg length inequality. Evidence of mixed quality supported the use, with limitations, of postural evaluation. The evidence was unclear on the applicability of measures of stiffness and the use of spinal x-rays. The evidence was of mixed quality, but unfavourable for the use of manual muscle testing, skin conductance, surface electromyography and skin temperature measurement. Conclusions: A considerable range of methods is in use for determining where in the spine to administer spinal manipulation. The currently published evidence falls across a spectrum ranging from strongly favourable to strongly unfavourable in regard to using these methods. In general, the stronger and more favourable evidence is for those procedures which take a direct measure of the presumptive site of care– methods involving pain provocation upon palpation or localized tissue examination. Procedures which involve some indirect assessment for identifying the manipulable lesion of the spine–such as skin conductance or thermography–tend not to be supported by the available evidence.https://doi.org/10.1186/2045-709X-21-3

Peoples’ Views About the Acceptability of Executive Bonuses and Compensation Policies

International audienceWe applied a technique borrowed from the field of bioethics to test whether justice-related factors influence laypersons’ decisions concerning business ethics. In the first experiment, participants judged the acceptability of remuneration policies and in the second that of executive bonuses. In each study, participants judged a set of 36 situations. To create the scenarios, we varied (a) retributive justice—the amount of remuneration; (b) procedural justice—the clarity of the procedure that determined the remuneration; (c) distributive justice—the extent of the distribution of bonus payments amongst employees; and (d) restorative justice—a special compensation for hazardous working conditions or accidents at work. K-means clustering of all 36 judgments revealed four different personal positions in both experiments. One group of people readily accepted all situations. The other three groups’ judgments were mainly a function of distributive justice modulated in different ways by the context determined by the other variables. Furthermore, people conceive of distributive justice as categorical: Acceptability judgments only increase if companies give bonuses to all employees. Granting bonuses to a subset (i.e. mangers or executives) does not increase acceptability. Our results are useful for policy makers and provide business ethics researchers with a novel technique

An institution-based view of executive compensation: A multilevel meta-analytic test

We offer a multilevel meta-analytic study of the firm performance ¿ executive compensation relationship, comprising prior tests derived from 332 primary studies nested in 29 countries. Although our work modestly supports the optimal contracting theory-based expectation that compensation is positively associated with performance, it also reveals considerable cross-country variability in this relationship. We trace this variance to differences in the level of development of the formal and informal institutions protecting investors against managerial overcompensation and underperformance. In terms of intentionally devised and enforced formal institutions, we find significant positive moderating effects on the focal relationship of the rule of law and strength of investor protection variables. For self-enforcing informal institutions, we find similar effects for concentrated ownership and compensation-related entries in codes of good corporate governance. We also find that formal and informal institutions function in a complementary manner in shaping the performance sensitivity of executive compensation. The focal relationship becomes stronger when concentrated owners have access to well-functioning courts, and when informal norms of good governance are supported by shareholder protection laws. Our study thus suggests that optimal contracting theory must be supplemented with an institution-based view, to account for the conditioning effects of institutions on national contracting environments