Contemporary Issues in Accounting

Question: Discuss about theContemporary Issues in Accounting. Answer: Introduction: This has been observed that the role of the CEO is to delegate the strong corporate governance for the seamless operation of the business. By introducing the interesting remuneration packages of the top level executives, the effectiveness of the organization can be enhanced. The same concept has been identified in this unit of corporate governance and the given topic six where it is clearly discussed that the an effective corporate governance can be practiced with the independent role of the CEO and thus enhance the value of the firm. Theme: CEO of the organization is playing the dynamic role in the different business field. A vast theoretical and practical implication of the CEO has been emphasized in this research. The effectiveness of the organization largely depends on quality of the corporate governance which is likely to provide long term incentives to CEOs. Thus the given article investigates the quality of institutional governance which has effect on the performance of the firm and the compensation structure of CEO of the organization. This has been found in the article of Deegan (2013) that the standard of the firms external corporate governance performance needs to be evaluated by the management of the organization. However, Ahn (2016) articulates that this has considered one of the contingency of the organization because most of the organization failed to generate the variations in the compensation contract of the CEO of the organization. This has been observed that most of the CEO engaged in mitigating the pr oblem related to the agency between managers and shareholders. In the below the diverse opinion has been discussed and analyzed the relationship between the performance of the CEO and institutional governance of the organization. The Dynamism of CEOs Performance has Limited Exposure in the Firm Performance: The given article agrees that the diverse long term incentive contracts of CEO can increases the effectiveness of the corporate governance. However, this has been argued with the fact that the structure of the CEOs compensation can be considered as the total of the fixed compensation inclusive of the additional compensation related with the prior and current performance (DesJardins and McCall 2014). In other words, this can be said that the most of the organization has been structured their compensation as per the benchmark of the past performance of the CEO along with the future potentiality in term of delivering the job responsibilities and delegated authoritative responsibilities. Therefore, the organizational performance excellence is completely depends upon the top executives efforts and actions during the time period. This has been found in the article of Bivens and Mishel (2013) that the satisfactory pay level, thus, influence the current and future performance. Unfortunately in most of the case scenarios, companies are negatively affected due to weak corporate governance. The same opinion in Ahn (2016) addressed that the lack of judgmental approach of CEO disclose the false financial implications of the company. For instance the companies like HIH Insurance, One.Tel are perfect example where inadequacies of independent judgments of CEOs were the main reason behind their collapses. All these organization faced problem during the negotiation between the shareholders and managers of that particular organization. Most of the opinion of the managerial power theorists define that the compensation of the CEO is the optimal for the shareholders. It determines that the ultimate structure of the compensation which can be influence in the shareholders maximization of values. Presence of Active Monitoring for Generation of Cross-Sectional Variations in the Compensation of CEO The study based on Fama and Jensen is based on the control mechanism of the firm exists especially with the active monitoring of the data generated on the cross sectional variations for the purpose of then CEO compensation. The control mechanism is further related to the external and the internal contracts, which is related to the study of the behavior of then external shareholders satisfaction (Deegan 2013). In the different types of the studies, it has been observed that then relationship between the employee compensation and performance of the firm is most related to those situations when there is weak monitoring of the performance of the firm. The study revealed that the quality of the external corporate governance of the firm is required to maintain an interaction to study the Gap in the incentive compensation. The main aim of the study is to provide the company the compensation variants which are directly related to the active monitoring performance of the employees. (Ahn 2016) . The Intervention in the Short-Term Orientation is Required to Create an Ailment with the Long-Term Interest of the Shareholders With the different study conducted by Deegan (2013), it was found that the CEOs needed to prevent the short term in order to create a better ailment with the interest of long term shareholders. The study conducted has further shown that the sort run behavior of the CEO could affect the potential cost of interest of the shareholders. Then study conducted depicted the results that the various types of the institutional investors can determine the incentive contracts of then CEO. The overall study showed that the various benefits associated to the employee compensation were able to encourage the working performance of the CEO in terms of the compensation received was only short term in nature (Ahn 2016). The study focused on several broad aspects such as boosting of short-term capital prices, advertising, Research and development. Hence, the corporate governance plays a crucial role in determining the compensation and the employee performance. References: Ahn, J.Y., 2016. Top Executives' Pay For Long-Run Performance And Corporate Governance.Journal of Applied Business Research,32(2), p.661. Bivens, J. and Mishel, L., 2013. The pay of corporate executives and financial professionals as evidence of rents in top 1 percent incomes.The Journal of Economic Perspectives,27(3), pp.57-77. Deegan, C., 2013.Financial accounting theory. McGraw-Hill Education Australia. DesJardins, J.R. and McCall, J.J., 2014.Contemporary issues in business ethics. Cengage Learning.