Skip to main content

Research Repository

Advanced Search

Executive bonus compensation and financial leverage: Do growth and executive ownership matter?

Adu-Ameyaw, Emmanuel; Danso, Albert; Acheampong, Samuel; Akwei, Cynthia

Executive bonus compensation and financial leverage: Do growth and executive ownership matter? Thumbnail


Authors

Emmanuel Adu-Ameyaw

Albert Danso

Samuel Acheampong

Cynthia Akwei



Abstract

Purpose: This study aims to examine the impact of executive bonus compensation on a firm’s financial leverage policy and the extent to which this compensation–leverage relation is moderated by firm growth and executive ownership. Design/methodology/approach: Using data from 213 non-financial and non-utility UK FTSE 350 firms for the period 2007–2015, generating a total of 1,784 firm-year observations, panel econometric methods are used to test the model. Findings: Drawing insights from agency theoretic view, this paper uncovers that managerial cash bonus compensation is negatively and significantly related to financial leverage. However, stock bonus compensation has a positive and significant impact on leverage. This study also observes that compensation–leverage is moderated by both firm growth and executive ownership. The results remain robust to alternative econometric models. Originality/value: While this paper builds on the risk-motivated argument of executive bonus compensation literature, it is the first – to the best of the knowledge – to explore the bonus compensation-corporate financial leverage and, particularly, examine the extent to which firm growth and corporate executive ownership matter in this relationship.

Citation

Adu-Ameyaw, E., Danso, A., Acheampong, S., & Akwei, C. (in press). Executive bonus compensation and financial leverage: Do growth and executive ownership matter?. International Journal of Accounting and Information Management, https://doi.org/10.1108/IJAIM-09-2020-0141

Journal Article Type Article
Acceptance Date Feb 26, 2021
Online Publication Date May 19, 2021
Deposit Date Apr 19, 2021
Publicly Available Date Jun 20, 2021
Journal International Journal of Accounting and Information Management
Print ISSN 1834-7649
Electronic ISSN 1758-9037
Publisher Emerald
Peer Reviewed Peer Reviewed
DOI https://doi.org/10.1108/IJAIM-09-2020-0141
Public URL https://uwe-repository.worktribe.com/output/7268729

Files

Executive bonus compensation and financial leverage: Do growth and executive ownership matter? (975 Kb)
PDF

Licence
http://creativecommons.org/licenses/by-nc/4.0/

Copyright Statement
This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com





You might also like



Downloadable Citations