IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The setting of a coalition contract between controlling shareholder, managers and employees: How to mix incentive and political logics?

Listed author(s):
  • Hubert De La Bruslerie


    (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

The leveraging of control is the possibility for the controlling shareholder to lower her direct participation in capital through a convergence of financial and economic interest with other shareholders or would-be shareholders in the firm. In this paper, the setting of a coalition contract is done by awarding stocks to managers and employees. This article analyses it, on one side, in a rationale of economic incentive and, on the other side, in a rationale of political coalition of the initial dominant shareholder with managers and employees. It is shown that the two logics are not opposite but complementary. The sharing of the private benefits between members of the new coalition is at the heart of a new implicit contract. The initial controlling shareholder "buys" efficient efforts by awarding a stake of capital to managers or employees, but also by allowing them to share a part of the private benefits and to join a new dominant group. Even if the effort function of the employees is not productive nor observable, a targeted broad diffusion of new stocks may still respect the coherence between an economic incentive rationale and a political substitution rationale. At the end, we introduce the idea of political management of the leverage of control.

If 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.

File URL:
Download Restriction: no

Paper provided by HAL in its series Post-Print with number halshs-00636608.

in new window

Date of creation: 2011
Publication status: Published in International Journal of Corporate Governance, 2011, 2 (3/4), pp.237-267. <10.1504/IJCG.2011.044377>
Handle: RePEc:hal:journl:halshs-00636608
DOI: 10.1504/IJCG.2011.044377
Note: View the original document on HAL open archive server:
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00636608. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.