Metode Penelitian Ekonomi dan Bisnis
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Transcript of Metode Penelitian Ekonomi dan Bisnis
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Strategy, Corporate Governance, and Incentive: Impact on
Performance
STIE YAI
Johnny JermiasPhD CPA, CMA
Professor
UPI YAI
Seminar UKI 2015
Outline
• Introduction• Publishing in Scopus Journals• Efforts-Measurement-Incentive Linkages• Performance measurement framework• Balanced Measures• Strategy-Control Structure• Strategy-Governance-Incentive• Research Efforts & Results• Conclusions
Introduction: Background
• ..\published paper\Accounting and Finance published 2014.pdf
• ..\published paper\BAR two.pdf• ..\published paper\Accounting Perspective
2012.pdf• ..\published paper\AOS one.pdf
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Publishing in Scopus journals
Characteristics of topics that have a good chance to be accepted: Address real world/societal problem Fills significant gap/advances theory Produced novel/new/unexpected results Address hard to solve research
issues/introduces new procedures
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Publishing in Scopus Journals Effective ways to learn how to publish in Scopus Journals: Follow the process of your PhD thesis Find experienced and successful co-
authors Ask for guidance from experts in your field No access or difficult to find Experts are extremely busy
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Publishing in Scopus journals
Two factors to generate significant/ meaningful topics: Process to generate research ideas Following and critically looking at the literature Keeping up to date of real world issues Working with colleagues
Ability to differentiate significant/meaningful topics Awareness of existing literature
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Role of thesis supervisor Thesis supervisor should be able to: Minimize the risk of undertaken research topics
that have little chance of successful completion Help students obtain correct data on the first
attempt Eliminate outcome dependence research Reduce the temptation to abandon the main
research topic as the research progress Set the time schedule for each milestones
(literature review, hypotheses, research design, data collection, data analyses, first draft, final draft)
Introduction: Background• Enron scandal:
– Adopted mark-to-market accounting: contract between Enron and Blockbuster Video was recognized as income for US $ 110 billion (Rp. 1.1 trilliun) although it has not been realized,
– Excecutive compensation was based on the inflated income (Healy and Palepu, 2003).
– Share price: $90/share (June 2000) to $0.10/share (October 2001).
– Shareholders’ loss: US $11 billion (Rp 110 triliun). – Arthur Andersen (big five accounting firm) liquidated– Triggered the enactment of Sarbanes-Oxley Act (2002)
Introduction: Background• Bre-X scandal: Bre-X mineral Ltd, • headquarter: Calgary, Alberta, Canada• Announced that it has discovered gold reserves in
Busang (Kalimantan) • Investors used this information: Stock price: US
$0.05/share (1994) became US $286.50/share (October 1995).
• Total market capitalization US $6 billion. • 1997: stock price close to zero.• Shareholders’ loss: Ontario Municipal Employee
Retirement Board $45 million; Quebec Public Sector Pension Fund $70 million; Ontario Teachers Pension Plan $100 million (Goold & Willis, 1997).
Introduction: Agency Theory
•Agency Theory:–Separation between ownership and control creates agency problems– Information asymmetry between P-A (Agents take advantage of their superior information)–Agents’ efforts are unobservable–Agents are self-interested individuals–Dislike work (trade-off between work and pleasure)
•Minimize agency problems: monitoring or incentives
Simon
Fraser
University
Simon
Fraser
University
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Efforts-Measurement-Incentive
Outcome of manager’s decision and effort
RiskAversion
DecisionMaking Effort
ReceivesPay
Technology, etc)
Contextual Variables(Culture,
Technology, etc)
External Factors
PreparePerformance
Report
Accounting
Pays ManagerPays Manageron the
Basis of thePerformance
Report
Top Management
Managers
Unobservable
Observable
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Performance Measurement Framework
1. What counts, gets
measured
3. What gets done, getsrewarded
4.What gets rewarded,
reallycount
Competitive Strategy
2. What gets measured, gets done
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BalancedMeasures
2. Quantitative/Qualitative
1. Lead/Lag
4, Objective/Subjective
3. Financial/Non-Financial
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Strategy-Control-Incentive Linkages
Objectives
Strategy Planning/Control
Execution and Evaluation
Reward/Penalty
FeedbackRevise Revise
Strategy-Governance
Innovative
Strategy
CentralizedTight ControlAuthocratic
Freedom/Empowerment
Democratic
Efficiency
Strategy-Governance Structure-Incentive Linkages
Innovative: Unique product/service, rapid changes environment, R&D intensive, first mover, quasi-monopoly, premium price,
Inside directors dominant, CEO/Chairman of BOD separation, output control
TextText
TextText
IncentiveCompensationCompensation
GovernaanceGovernaanceStructureStructure
StrategyStrategy
Equity compensation, Performance-linked Compensation (outcome-based), Long-term incentive plan
Strategy-Governance Structure-Incentive Linkages
Efficiency: Standardized products, long product life cycle, slow changes, economies of scale, follower, market driven price,
Outside directors dominant, CEO/Chairman of BOD duality, behavior control
TextText
TextText
IncentiveCompensationCompensation
GovernaanceGovernaanceStructureStructure
StrategyStrategy
Fixed payment, Short term incentive, Salary-based compensation
Increase Productivity
Maximize Shareholder Value
Increase Revenue Growthand profitability
Increase Customer Satisfaction
IncreaseDistributor Satisfaction
AchieveOperational Excellence
Enhance CustomerRelationship Management
Improve Employee Satisfaction
Enhance organizational competence
Financial
Customer
InternalProcess
Learning &Growth
IncreaseInnovation
Strategy Map
Training andknowledge sharing
Add Your Title here
Implementation
Link IVFormulation
(Link I)
Formulation
(Link II)
Formulation (Link III)
Outcome (Link V)
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Research Efforts & Results
Research FrameworkResearch Framework
Add Your Title here
PerformanceOrganizationalVariable
(CG, INC)
CompetitiveStrategy
Environment
Implementation
Link IVFormulation
(Link I)
Formulation
(Link II)
Formulation (Link III)
Outcome (Link V)
Research Efforts & Results
• Need to examine the influence of competitive strategy on the design of corporate governance and executive compensation, and in turn, performance•How the fit among strategy, types of governance structure, and types of compensation affects firm performance
Simon
Fraser
University
Research Efforts & Results
Example
Simon
Fraser
University
Antecedent Variable
Strategic Orientation
Organizational Variable
Outcome Variable
Dynamic CompetitiveEnvironment
Stable CompetitiveEnvironment
Innovation
Efficiency
CG: UnstructuredInc: PBI
CG: StructuredInc: SBI
PerformanceStrategyFormulation
ManagerialDecisions
Outcome
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Research Efforts &Research Efforts & Results: Results: A&FA&F (20(201414))
PERFORMit = γ0 + 1 PLCit + 2 MSOWN it + 3 PLTIPit + 4 STRAit + 5 STRAit*PLCit + 6STRAit*MSOWNit + 7 STRAit*PLTIPit + 8 MTGSit + 9 MTGSFEEit + 10 RETYRSit + 11 SIZEit + itWhere,PERFORMit : One year total return to shareholders (TRS1YR) PLCit : Percentage of incentive-based compensation to total compensation.MSOWNit : Percentage of the firm’s shares owned by the named executive officers.PLTIPit : The amount paid out to the executives under the firm’s long term incentive plan as a percentage of total compensation. STRAit : An indicator equal to 1 for cost leadership firms and 0 for product differentiation firms.
Simon
Fraser
University
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A&FA&F (20(201414))Simon
Fraser
UniversityRegression Analyses: DV: Market Return
Variables Prediction Coefficient Z-values
Intercept ? -7.49 -0.23
PLC + 1.71 3.79***
MSOWN + 3.04 3.31***
PLTIP + -0.88 -2.41**
STRA ? 55.06 1.44
STRA*PLC - -1.03 -2.03**
STRA*MSOWN - -3.28 -1.88**
STRA*PLTIP - 1.49 2.90***
MTGS + -1.83 -1.47*
MTGSFEE + 0.08 0.22
TERTYRS - 0.01 0.20
SIZE + -8.10 -3.17***
R2 0.06
Wald Chi 45.77***
Sample Size 749
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A&FA&F (2(2014014))Simon
Fraser
University
Figue 2: The Effects of Business Strategy on the Relationship between Equity-based
Compensation and Performance
-100
0
100
200
300
400
0 50 100Percentage of Equity-Based
Compensation
Perf
orm
an
ce
InnovativeEfficiency
Research Efforts & ResultsEuropean Accounting Review
(2007)Table 3
Regression results of ROA and ROS on independent and control variables using dichotomous and continuous measures of innovative effortsa
Variables Prediction Dichotomous INOV Continuous INOV (t-statistics)b (t-statistics)
ROA ROS ROA ROS (1) (2) (3) (4) (5) ___
Intercept ? 0.000 0.000 0.000 0.0001.992** 1.689* 1.642* 1.369
INOV + 0.096 0.077 0.494 0.4980.467 0.383 1.693 1.757
ENV - 0.086 0.122 -0.114 -0.139 0.664 0.936 -1.018 1.234
INOV*ENV - -0.560 -0.516 -0.918 -0.897 -2.352** -2.221** -3.041*** -3.066***
SIZE ? -0.078 -0.137 -0.065 -0.127 -0.839 -1.455 -0.706 -1.375
LEV ? -0.077 -0.027 -0.063 -0.017 -0.759 -0.263 -0.631 -0.173
R2 0.159 0.139 0.180 0.17F 4.118*** 3.538*** 4.788*** 4.512*** Sample size 116 116 116 116
Simon
Fraser
University
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Research Efforts & Research Efforts & ResultsResults(EAR 2007)(EAR 2007)
Simon
Fraser
University
Figure 2: The Effects of Corporate Governance on the Relationship
between Strategy and Performance
-1000
100200300400
0 50 100Degree of Centralized
Power
Perf
orm
an
ce
EfficiencyInnovative
BPKP August 4, 2009
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Conclusion Find interesting topic, significant contribution to
the existing literature Find good co-author(s) Know the target journal (journal have different
styles) Expose your work to your peers (present in
good conferences) Don’t be defeated by reviewers’ comments Length from idea generation to first draft: 1-2
years Length of review process: 1-4 years
Good luck