The Determinants Of Equity Based Compensation: A Bidimensional Validity Of The Agency Theory

Previous studies have tried to make a comparative analysis between the market-oriented system and the mixed governance system on the determinants of stock option awards for managers; however, these studies exhibit some failures that must be overcome. In addition, we note the absence of studies addressing the validity of the agency theory on the determinants of equity-based compensation in times of instability or crisis. We used a sample of 159 French companies and 203 US companies for the period spanning 2002 to 2010. The results of the present study support the conclusion that the variables measuring the size of the firm, growth opportunity, debt, management and control functions, size of the board, and ownership concentration explain the decision to grant equity-based compensation, regardless of the sample and period considered. Using a variable representing the presence of institutional investors, we show that this type of investor is only involved in controlling the leader in the French case, during a period of financial instability

The determinants of banking regulation in the MENA region

Theoretical foundations in banks\u27 response to capital settlement suggest that the systems proposed by Basel are not sound. It is conceivable that regulators will consider alternative approaches to enhance the safety and soundness of the banking system. The regulation includes several decrees and ratios; the areas of interest encompassing the areas are subject to principal component analysis (PCA).The paper aims to present a regulatory framework based on balance sheet ratios, such as Capital requirements (equity ratio; Tier 1 ratio; Total Equity/Net Loans; Total Equity/Deposits); for liquidity needs (liquidity/deposits; liquidity/total assets; liquidity/deposits and loans, and net loans/total assets); for leverage requirements (total liabilities/total assets; total assets/equity; and total liabilities/equity); also banking restriction index; Official supervision index; Private surveillance index, finally global index of regulations and supervision. Besides, it performs a PCA analysis on a set of 13 financial ratios to exploit and compare the financial characteristics of 239 banks (175 Conventional and 64 Islamic commercial banks) in the MENA region over a 2004-2015 period. This gives the main indices EXIGCP, EXIGLIQ, LEVCP, and LEVP

Earnings Management, Equity-based Compensation, Economic Conjuncture and Governance Mechanisms: A Comparative Study between France and the United States

Based on a sample of 159 French firms and 203 U.S. firms for the period extending from 2003 to 2010, generally, we find that for both cases, managers engage in earnings' management when they have a high percentage of equity-based compensation. The financial crisis was obviously important on managerial behavior and particularly on earnings management. Thus, the economic conjuncture is a new research question for equity compensation when it grants policy and earnings management. In addition, the governance mechanisms used to limit the opportunistic behavior of the manager also comes into play. Then we examine the governance mechanisms which encourage earnings management, particularly during allocation of equity compensation, where these two ideas have not been previously analyzed. We show that in contrast to a period of instability and economic recession, the manager has an incentive to earnings management to maximize his equity-based compensation during the period of economic growth. On the second point of research, we find on the one hand, that a governance mechanism which is effective in controlling earnings management that does not yield this result persists when awarding equity compensation. On the other hand, in the American case, the characteristics of the board of directors, and principally the compensation committee, and the ownership structure in the French case, can limit the opportunistic behavior of the manager during the allocation period of equity-based compensation. Keywords: Equity Compensation, Earnings Management, Economic Conjuncture, Governance Mechanisms JEL Classification: G3