Monitoring and incentives of executives in risky firms : a test of the association with firm performance

Hutchinson, Marion 2003, Monitoring and incentives of executives in risky firms : a test of the association with firm performance. In Batten, Jonathan A. and Fetherston, Thomas A. (ed), Social responsibility : corporate governance issues, Elsevier Science, Amsterdam, The Netherlands, pp.253-272.

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Title Monitoring and incentives of executives in risky firms : a test of the association with firm performance
Author(s) Hutchinson, Marion
Title of book Social responsibility : corporate governance issues
Editor(s) Batten, Jonathan A.
Fetherston, Thomas A.
Publication date 2003
Series Research in international business and finance ; v. 17
Chapter number 11
Total chapters 21
Start page 253
End page 272
Total pages 20
Publisher Elsevier Science
Place of Publication Amsterdam, The Netherlands
Summary This study investigates the relationship between a firm's risk and the effectiveness of the firm's corporate governance practices. Previous research investigating the relationship between corporate controls and firm performance has been mixed and often weak. Therefore, this study sets out to determine the efficiency of monitoring and incentive contracts given certain characteristics of the firm. That is, the study sets out to determine whether risk firms with higher monitoring and levels of incentives are associated with higher firm performance.
The results of this study of 282 firms demonstrate how the relationship between firm risk and performance is associated with the monitoring and incentive contracts used by these firms. In particular, the results of this study showed that the negative association between risk and firm performance is weakened when firms have stronger monitoring and incentive mechanisms. The particular contribution of this study is to show that the role of corporate governance variables infirm performance should be evaluated in the context of the firm's risk.

ISBN 0762310251
Language eng
Field of Research 150199 Accounting, Auditing and Accountability not elsewhere classified
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category B1 Book chapter
Copyright notice ©2003, Elsevier
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Document type: Book Chapter
Collection: School of Accounting, Economics and Finance
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