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Incentives Management During Privatization: An Agency Perspective

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  • Gloria Cuevas Rodríguez
  • Concepción Alvarez‐Dardet Espejo
  • Ramón Valle Cabrera

Abstract

abstract This paper explains, through a field study and from an agency perspective, how monitoring and incentive alignment mechanisms change to support the interests of a privatized firm's new ownership. In this case, privatization led to important changes in the board of directors and to more formal performance evaluation and compensation systems for top managers, as profitability and financial control gained relevancy with the firm ownership change. Our results show that differences in incentives management before and after privatization are due to different agency relations in the two periods. We also argue that in a privatization framework the relation between monitoring and incentive alignment mechanisms is complex, not simply substitutive as agency theory would predict, and this finding allows us to refine and extend agency theory for this specific context.

Suggested Citation

  • Gloria Cuevas Rodríguez & Concepción Alvarez‐Dardet Espejo & Ramón Valle Cabrera, 2007. "Incentives Management During Privatization: An Agency Perspective," Journal of Management Studies, Wiley Blackwell, vol. 44(4), pages 536-560, June.
    • Handle: RePEc:bla:jomstd:v:44:y:2007:i:4:p:536-560
    DOI: 10.1111/j.1467-6486.2006.00676.x
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    Cited by:

    1. Estrin, Saul & Meyer, Klaus E. & Nielsen, Bo B. & Nielsen, Sabina, 2016. "Home country institutions and the internationalization of state owned enterprises: A cross-country analysis," Journal of World Business, Elsevier, vol. 51(2), pages 294-307.
    2. Qiuyang Gu & Chunhua Ju & Fuguang Bao, 2020. "The Cross-Border Mergers and Acquisitions of Local State-Owned Enterprises: The Role of Home Country Government Involvement," Sustainability, MDPI, vol. 12(7), pages 1-23, April.
    3. Wang, Chang & Guo, Yue & Yang, Yu & Chen, Shiyi, 2022. "The environmental benefits of electricity industry restructuring in China: Ownership mixing vs. vertical unbundling," Energy Economics, Elsevier, vol. 115(C).
    4. Jiyuan Dong & Xiumei Lai & Dali Zhao, 2022. "How incentive affects knowledge transfer performance in corporate user community: The mediating roles of users' transfer willingness and ability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2249-2260, September.
    5. Ciprian Stan & Mike Peng & Garry Bruton, 2014. "Slack and the performance of state-owned enterprises," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 473-495, June.

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