Executive Compensation and Corporate Governance Post COVID-19: The Nordic Perspective

COVID-19 outbreak has re-designed business activities and changed the priorities in our lives. Since the pandemic is a sign of overexploitation of our habitat, it has stressed the importance of sustainable and resilient businesses and ‘stakeholderism'. A recent survey conducted by Willis Towers Watson (WTW) revealed that 74 percent of the American companies proceed with their executive compensation frameworks widely consistent with last year's;only 12 percent stated that they will make substantive changes in their corporate governance and remuneration structures. Surprisingly, the survey result does not alter too much in the Nordic countries which are egalitarian and stakeholder-oriented. Three-fifth (57 to 61 percent) of the employers in Norway, Sweden, Denmark, and Finland expressed that they are not planning to change the structure of the executive schemes and that one-fourth (24 to 26 percent) are still unsure. Therefore, this book chapter, as a commentary, aims to disclose and interpret the survey results from the Nordic countries perspective and guide the practitioners and academics on how the corporate governance systems and executive compensation schemes should be modified to reach fair, resilient, and sustainable businesses based on the key takeaways from the COVID recession and stakeholder theory. © 2023, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

The Impact of ESG Practices in Industry with a Focus on Carbon Emissions: Insights and Future Perspectives

In recent years, interest in economic, environmental and social sustainability has increased significantly. Companies are gradually adopting behaviors aimed at achieving the Sustainable Development Goals, which represent a crucial aspect of the 2030 Agenda. In practice, they are currently incorporating organizational strategies that jointly consider environmental, social and corporate governance (ESG), with the aim of generating value for all stakeholders. This paper aims to review, through a recognized seven-step procedure, the current literature on the impact that ESG practices have in industry, with a focus on the reduction of carbon emissions. The results are extremely useful for both researchers and entrepreneurs. The bibliometric analysis shows that interest in the ESG paradigm has grown considerably in the last three years. Furthermore, through the analysis of 13 key documents, it emerges that (i) the European community is pushing significantly towards the adoption of ESG practices through new regulations, (ii) the link between industrial operations and carbon emissions can no longer be neglected within the factory of the future, and (iii) significant efforts are still needed to standardize, in terms of variables and KPIs, the adoption of ESG-centric strategies.

Corporate Governance Research in Asian Countries: A Bibliometric and Content Analysis (2001–2021)

Corporate failure suggests that weak corporate governance leads to frail institutions and exposes them to severe crises. Asian countries have faced financial crises in three different periods, most recently due to the COVID-19 pandemic. A crisis will trigger structural changes in corporate governance to enable firms to either respond to, or prevent, the reoccurrence of potentially similar events. The characteristic of corporate governance practice in Asian countries are also unique due to some institutional and informal factors. These will alter direction and future trend of research in corporate governance in Asian region. The objective of this study is to utilize a bibliometric analysis which focuses on research trends and themes, and citations (with additional inclusive visualization) and perform in-depth content analysis to trace the evolution and identify knowledge of corporate governance in Asian countries from 2001 to 2021. Following bibliometric analysis, a sample of 656 articles on corporate governance in Asian countries has been extracted and analyzed from the Scopus database. The results indicate that there is a growing of interest in corporate governance in Asian countries from 2001 to 2021. Eight major themes have been recognized: corporate governance, corporate social responsibility and financial performance, corporate strategy and performance, agency theory, corporate sustainability, audit and agency problems, firm size, and business ethics. Major findings, shortcomings, and directions for future research are also discussed in this study. In general, most cited articles related to corporate governance theme explain the importance of corporate governance in companies with the focus on preventing financial fraud, impact on earnings management, and cost of equity capital in the market and reporting methods.

A Renewed Focus on Human Capital: Certified Public Accountant

Under Item 101(c), public companies are required to disclose information about their human resources, including the number of people employed, distinguishing between fulltime and part-time employees;the number of employees per department;and human capital management policies, practices, and performance. According to the final amendments and after considering public comments, Item 101(c) requires the following disclosure: . According to the SASB, the human capital sustainability dimension "addresses the management of a company's human resources (employees and individual contractors) as key assets to delivering long-term value" (https://bit.ly/3B0QkOe). Developments in technology and digitization are continuous;knowledge gained today will be outdated tomorrow. [...]creating a learning culture by continuously investing in human capital is key to maintaining and strengthening companies' competitive positions.

Russian-Ukrainian War, Innovation, Creative Imitation & Sustainable Development

The Russian-Ukrainian war shows a rapidly (and a long-term, probably) worsening outlook for the world economy, that will change specifically the European sustainable development. In addition to COVID-19's tremendous impact on global economies, the Russian-Ukrainian war is producing a new major economic shock, pushing the biggest global corporations towards an outburst of the basic drivers of global capitalism: Health;Energy;Food;Communication. In the current state of play of market globalisation (Network Globalisation), a company's profit and development objectives are induced to target R&D spending on innovation policies in which the boundaries between imitation and innovation are fluid, and anyway dominated by shortage management policies.

Environmental, social and governance-efficient frontiers in an emerging market milieu

Orientation: Environmental, social and governance (ESG) factors have evolved from peripheral significance (2000s) to a leading factor (2022) for many corporates. Most are now assigned ESG grades;which are increasingly scrutinised by investors. Research purpose: An ideal milieu might involve rewards for responsible firms and penalties for culprits, but in a profit-driven world, this is not always true. Investors demand profitability so some trade-off is required. Motivation for the study: Recent work to measure and optimise portfolio performance while observing corporate conscientiousness is promising: return/risk profiles comparable to those attained by unconstrained portfolios appear possible. Research approach/design and method: Portfolio optimisation using Lagrangian calculus. As ESG scores worsen, portfolio performance should be adversely affected, and we then apply – for the first time – these portfolio optimising developments to emerging market corporates. Main findings: ESG grades have improved over time, with both a statistically significant risk reduction and an increase in returns (the reverse for deteriorating ESG grades). As volatility increases, optimal ESG grades increase slowly as associated Sharpe ratios decrease. This could be due to an option-like reliance of inherent value upon underlying volatility. Practical/managerial implications: With better knowledge of trends, asset managers who take ESG metrics into account can confidently assert that ESG compliant portfolios can generate healthy risk adjusted returns (Sharpe ratios) and that these values are improving over time. Contribution/value-add: ESG compliant portfolios have become viable investments while adhering to sensible, responsible investment principles. ESG scores are improving globally, albeit at different rates.

Does risk matter for executive compensation?

PurposeThe purpose of this study is to examine whether chief executive officer (CEOs) are paid for the systematic and/or unsystematic risks and whether there is any optimum risk premium level in the executive pay.Design/methodology/approachFirm and year fixed effect panel data regression was used to estimate the relationship between total CEO compensation and systematic (market) and unsystematic (firm) risks.FindingsThere is no nexus between CEO pay and unsystematic (diversifiable) risk;however, the association between CEO compensation and systematic (undiversifiable) risk is positively significant in line with agency theory. Moreover, it is revealed that this positive relationship has an optimum point (curvilinear).Research limitations/implicationsThis paper contributes to the controversial argument in the literature by investigating the situation in the Swiss market. Switzerland is an exemplary country because of its direct democracy (consensus) structure for executive pay. This study is limited by the fact that only total CEO compensation is analyzed.Practical implicationsAs a practical implication, it is shown that after the optimal point, the higher compensation does not motivate the CEOs to take higher risks and does not provide the organizations with any additional benefit.Originality/valueThe finding of this study supports agency theory’s risk premium assumption and provides additional evidence to the contradictory results in the literature with a new country setting that has paramount importance in executive compensation phenomena. It is a comparative finding with prior literature also outlines the future research area in the risk and compensation literature.

How Do Remuneration Committees Affect Corporate Social Responsibility Disclosure? Empirical Evidence from an International Perspective

The main goal of this study is to analyze whether the existence of remuneration committees tend to disclose more corporate social responsibility (CSR) information. In addition, we test the moderating role played by the proportion of independent directors on boards of directors with the relationship between the constitution of remuneration committees and CSR disclosure. Previous research does not appear to have addressed these questions. The research questions proposed are tested using an international sample of 28,610 listed companies, and we took into consideration information on industrial companies from the Middle East, developed Asian and Pacific countries, both emerging and developed European countries, Africa, Latin America and North America. These findings provide evidence that the existence of remuneration committees is more likely to disclose CSR information, and the existence of independent board members positively moderates the association between the existence of remuneration committees and CSR disclosure. We expand on earlier empirical literature concerning corporate governance and CSR issues.