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Industry Effects on the Use of Board and Institutional Investor Monitoring and Executive Incentive Compensation

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Author Info

  • Kor, Yasemin Y.

    (U of Delaware)

  • Watson, Sharon

    (U of Delaware)

  • Mahoney, Joseph T.

    (U of Illinois at Urbana-Champaign)

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    Abstract

    This paper develops and empirically tests a theory of the use of board and institutional investor monitoring and the use of executive incentive compensation under different types of uncertainty in the industry. This empirical examination is based on a sample of U.S. firms operating in a wide range of industries. Practical implications derived from this paper direct the attention of both shareholders and governance specialists to critical tradeoffs involved in the use of specific governance mechanisms under demand, competitive, and technological uncertainty.

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    File URL: http://www.business.uiuc.edu/Working_Papers/papers/04-0108.pdf
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    Bibliographic Info

    Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 04-0108.

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    Date of creation: 2004
    Date of revision:
    Handle: RePEc:ecl:illbus:04-0108

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    Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp
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    1. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
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    7. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
    8. L. J. Bourgeois, III & Kathleen M. Eisenhardt, 1988. "Strategic Decision Processes in High Velocity Environments: Four Cases in the Microcomputer Industry," Management Science, INFORMS, vol. 34(7), pages 816-835, July.
    9. Amit, Raphael & Brander, James & Zott, Christoph, 1998. "Why do venture capital firms exist? theory and canadian evidence," Journal of Business Venturing, Elsevier, vol. 13(6), pages 441-466, November.
    10. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    11. Randall Morck & Andrei Shleifer & Robert W. Vishny, 1988. "Alternative Mechanisms for Corporate Control," NBER Working Papers 2532, National Bureau of Economic Research, Inc.
    12. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
    13. James M. Mahoney & Chamu Sundaramurthy & Joseph T. Mahoney, 1997. "The effects of corporate antitakeover provisions on long-term investment: empirical evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 349-365.
    14. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    15. Eckbo, B Espen, 1992. " Mergers and the Value of Antitrust Deterrence," Journal of Finance, American Finance Association, vol. 47(3), pages 1005-29, July.
    16. Willard T. Carleton & James M. Nelson & Michael S. Weisbach, 1998. "The Influence of Institutions on Corporate Governance through Private Negotiations: Evidence from TIAA-CREF," Journal of Finance, American Finance Association, vol. 53(4), pages 1335-1362, 08.
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    Cited by:
    1. Wang, Heli & Chen, Wei-Ru, 2010. "Is firm-specific innovation associated with greater value appropriation? The roles of environmental dynamism and technological diversity," Research Policy, Elsevier, vol. 39(1), pages 141-154, February.

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