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Deregulation and the Adaption of Governance Structures: The Case of the U.S. Airline Industry


  • Kole, S.R.
  • Lehn, K.


Deregulation provides a natural experiment for examining how governance adapts to structural changes in the business environment. We investigate the evolution of governance struture -- ownership concentration, compensation policy, and board composition -- in the U.S. airline industry during a 22 year period surrounding the Airline Deregulation Act of 1978.Consistent wit theory, we find that after deregulation (i) equity ownership is more concentrated, (ii) CEO pay increases, (iii) stock option grants to CEO's increase , and (iV) board size decreases.

Suggested Citation

  • Kole, S.R. & Lehn, K., 1997. "Deregulation and the Adaption of Governance Structures: The Case of the U.S. Airline Industry," Papers 97-05, Rochester, Business - Financial Research and Policy Studies.
  • Handle: RePEc:fth:robufr:97-05

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation


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