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Controlling shareholders and CEO pay monitoring: A panel threshold approach on the degree and seniority of control

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  • Lionel Almeida

    (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

Abstract

The intensity of monitoring and its effects on the design of CEO pay can vary depending on the degree of ownership and the seniority of controlling shareholders. This study uses a panel threshold model to identify threshold effects in these two dimensions of control in French listed companies. The results show firms can be deemed to be non-controlled below a threshold of 10% of equity; above that, three regimes of controlled firms are identified: influential (10% to 33%), dominant (33% to 45%) and majority (above 45%) controls. One threshold point in the seniority of control ? at about eight years after taking control ? separates out new and long-term controls. Non- and newly-controlled firms are found to rely on optimal contracting to deal with agency and retention issues, while influential and majority controlling shareholders bring better governance and effective monitoring. Located at an intermediate level of control, dominant controlling shareholders show evidence of entrenchment.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lionel Almeida, 2021. "Controlling shareholders and CEO pay monitoring: A panel threshold approach on the degree and seniority of control," Post-Print hal-03292051, HAL.
    • Handle: RePEc:hal:journl:hal-03292051
    DOI: 10.3917/fina.421.0051
    as

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