The Measurement of Firm Ownership and its Effect on Managerial Pay
AbstractThis paper uses German evidence to address two questions about corporate governance. The effects of ownership on corporate governance have received much recent attention, but very little of this has been devoted to the appropriate way to measure firm ownership. The results of this paper show that the conclusions reached about the effects of ownership on corporate governance can depend critically on the particular ownership measure used, and that the widely-used weakest-link principle is wholly unsatisfactory as a means of dealing with the issues raised by pyramid ownership structures. The paper also shows that greater ownership concentration typically weakens the link between managerial pay and firm profitability. This is inconsistent with the hypothesis, emphasised in the recent literature on the USA, that large owners are a complement to, rather than a substitute for, such a link.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1774.
Date of creation: 2006
Date of revision:
Other versions of this item:
- Wolfgang Eggert & Alfons Weichenrieder & Jeremy S.S. Edwards, 2006. "The Measurement of Firm Ownership and its Effect on Managerial Pay," Working Papers CIE 1, University of Paderborn, CIE Center for International Economics.
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-07 (All new papers)
- NEP-BEC-2006-10-07 (Business Economics)
- NEP-FIN-2006-10-07 (Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeremy Edwards & Alfons Weichenrieder, 2004. "How Weak is the Weakest-Link Principle?On the Measurement of Firm Owners’Control Rights," CESifo Working Paper Series 1255, CESifo Group Munich.
- Elston, Julie Ann & Goldberg, Lawrence G., 2003. "Executive compensation and agency costs in Germany," Journal of Banking & Finance, Elsevier, Elsevier, vol. 27(7), pages 1391-1410, July.
- repec:fth:prinin:430 is not listed on IDEAS
- Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999.
"Corporate Ownership Around the World,"
Journal of Finance, American Finance Association,
American Finance Association, vol. 54(2), pages 471-517, 04.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1840, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
- Steven N. Kaplan, 1993.
"Top Executives, Turnover and Firm Performance in Germany,"
NBER Working Papers
4416, National Bureau of Economic Research, Inc.
- Kaplan, Steven N, 1994. "Top Executives, Turnover, and Firm Performance in Germany," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 10(1), pages 142-59, April.
- Steven N Kaplan, 1994. "Top Executives, Turnover and Firm Performance in Germany," CEPR Financial Markets Paper, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ 0045, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ.
- Marianne Bertrand & Sendhil Mullainathan, 2001. "Are Ceos Rewarded For Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(3), pages 901-932, August.
- Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 81-112.
- Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, American Finance Association, vol. 57(6), pages 2741-2771, December.
- Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, American Economic Association, vol. 91(1), pages 54-78, March.
- Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 65(3), pages 365-395, September.
- Sendhil Mullainathan & Marianne Bertrand, 2000.
"Agents with and without Principals,"
American Economic Review, American Economic Association,
American Economic Association, vol. 90(2), pages 203-208, May.
- Marianne Bertrand & Sendhil Mullainathan, 2000. "Agents with and without Principals," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 809, Princeton University, Department of Economics, Industrial Relations Section..
- Gary Gorton & Frank A. Schmid, 2004. "Capital, Labor, and The Firm: A Study of German Codetermination," Journal of the European Economic Association, MIT Press, MIT Press, vol. 2(5), pages 863-905, 09.
- Sonja Daltung & Vittoria Cerasi, 2006.
"Financial structure, managerial compensation and monitoring,"
FMG Discussion Papers, Financial Markets Group
dp576, Financial Markets Group.
- Vittoria Cerasi & Sonja Daltung, 2006. "Financial structure, managerial compensation and monitoring," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 24634, London School of Economics and Political Science, LSE Library.
- Cerasi, Vittoria & Daltung, Sonja, 2007. "Financial structure, Managerial Compensation and Monitoring," Working Paper Series 207, Sveriges Riksbank (Central Bank of Sweden).
- Vittoria Cerasi & Sonja Daltung, 2006. "Financial Structure, Managerial Compensation and Monitoring," Working Papers, UniversitÃ degli Studi di Milano-Bicocca, Dipartimento di Statistica 20061102, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.