This thesis investigates how chief executive officer (CEO) equity incentives affect the remediation of material weaknesses (MWs) in internal control. First, we predict that the sensitivity of CEO stock and stock option portfolios to stock price (CEO price sensitivity or delta) has a positive impact on firm promptness in remedying MWs, because CEOs whose personal wealth is tied to stock price suffer losses from negative market reactions to the public disclosure of MWs. Second, we predict that the sensitivity of CEO stock option portfolio to stock-return volatility (CEO volatility sensitivity or vega) has a negative impact on firm promptness in remedying MWs, as firms with internal control weaknesses are associated with higher information and operating risks that manifest in stock return volatility. Our empirical results, based on a sample of firms disclosing MWs in internal control under the Sarbanes-Oxley Act (SOX) during November 15, 2003 and August 27, 2006, are consistent with the above predictions. We further provide evidence that an effective board of directors could mitigate the undesirable, negative impact of CEO volatility sensitivity on MWs remediation. We measure firms’ promptness in remedying MWs based on their subsequent internal control audit opinions (e.g., Ashbaugh-Skaife et al. 2008; Goh 2009); and CEO price (volatility) sensitivity as the dollar change in CEO stock and option portfolios (option portfolio) from a 1 percent change in stock price (Core and Guay 2002). This thesis is innovative with respect to the prediction and evidence of the opposing effects from CEO price and volatility sensitivities on internal control quality. This new evidence contributes to the literature that examines managerial incentives embedded in stock-based and option-based compensation plans in various economic contexts (e.g., Knopf et al. 2002; Coles et al. 2006; Low 2009; Armstrong et al. 2013). Our findings suggest that when stock constitutes a major part of CEO compensation, the mandatory disclosure requirement of SOX provides a channel for the stock market to discipline CEO. However, when options dominate CEO compensation, volatility sensitivity and the associated risk-taking incentive can cause CEOs to delay rectifying internal control deficiencies. These results have interesting policy implications for regulators and firms concerning mandatory disclosure and compensation design. Moreover, this thesis contributes to the broad literature on corporate governance by documenting an interaction between corporate governance and CEO incentives, namely that strong corporate governance mitigates the undesirable risking-taking incentive caused by CEO option holdings. Overall, this thesis deepens our understanding on mechanisms through which regulators, firm executives, and boards of directors strengthen internal control over financial reporting in the post-SOX era. / published_or_final_version / Business / Doctoral / Doctor of Philosophy

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The purpose of this research is to determine the role of employees' psychological contract in the successful implementation of management tactics and achieving optimum work performance. The concept of the psychological contract was first introduced by Argyris in 1960, in reference to the employer and employee expectations of the employment relationship (Smithson and Lewis, 2003). Recent research in the United Kingdom has revived the concept, with particular focus on how the psychological contract affects employee attitude or how it may be affected by employer actions. The perceived breach of psychological contracts, for example, may be linked to job satisfaction or staff retention. Research on the topic in a South African context is limited. The purpose of this research is to apply the concept to the South African context and to specifically determine how it impacts on strategy implementation through management tactics, as well as work performance. Furthermore the influence of factors such as gender, ethnicity and relative age will be investigated. Research will be conducted amongst employees of Engen Refinery, located in Durban, South Africa. It is expected that this study will add value to the body of knowledge in this field as well as benefit the company by identifying how an understanding of employees' psychological contracts is relevant to the implementation of tactics and achieving optimum work performance. Questionnaires will be administered to employees. A focus group discussion will be held with 5 employees. Two psychologists and one psychometrist will be interviewed. Two employees, who are also middle managers will be interviewed. Research findings indicate that the psychological contract of employees has a direct influence on the successful implementation of management tactics and optimising work performance at the Engen Refinery. Employees favour a relational psychological contract. It follows that meeting the relational needs of employees would result in an improvement in the successful implementation of tactics and work performance. Positive interpersonal relationships based on trust, respect and open communication minimise gaps in psychological contracts and reduce the degree of assumption with regard to mutual expectations. This has the effect of reducing feelings of inequity, which, based on equity theory, improves commitment and work performance and reduces perceptions of psychological contract violation. Recognition, and the application of behaviour modification theory, may be practically applied where a relational psychological contract is favoured, in order to influence the transactional aspects of the contract. While gender and age do not appear to influence how the psychological contract affects the implementation of tactics and work performance optimisation, ethnicity does, in the particular context of Employment Equity which is peculiar to South Africa. Research findings indicate that the concept of the psychological contract is relevant to improving the work environment, and can be used to effect change in order to enhance the successful execution of strategy and optimise employee work performance. / Thesis (MBA)-University of KwaZulu-Natal, 2005.

Thesis (Ph. D.)--Uppsala University, 1998. Thesis summary page inserted. / Includes bibliographical references.

Thesis (M.P.A.)--University of Hong Kong, 1992.

Thesis (Ph. D.)--University of Missouri-Columbia, 1996. / Typescript. Vita. Includes bibliographical references (leaves [132]-140). Also available on the Internet.

Thesis (Ph. D.)--University of Missouri-Columbia, 1996. / Typescript. Vita. Includes bibliographical references (leaves [132]-140). Also available on the Internet.

Thesis (M.P.A.)--University of Hong Kong, 1992. / Also available in print.

Thesis (Ph. D.)--Ohio State University, 2006. / Title from first page of PDF file. Includes bibliographical references (p. 118-127).

Thesis (Ph. D.)--Ohio State University, 2006. / Title from first page of PDF file. Includes bibliographical references (p. 143-147).