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Do Low Cost Carriers Have Different Corporate Governance Models?

Author Info

  • Carlos Alves

    ()

    (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto)

  • Cristina Barbot

    ()

    (CETE, Faculdade de Economia do Porto, Universidade do Porto)

Abstract

In this paper, we investigate whether different business models in the same industry (passenger air transportation) lead to different corporate governance models. We found that low cost carriers (LCCs) organise their boards differently from full service carriers (FSCs), in order to achieve lower costs and the faster decision-making process that is required by their business model. We also found that LCCs and FSCs solve their potential agency cost problems differently. FSCs have more board committees in order to monitor management, and LCSs have a closer coincidence of interests between shareholders and management.

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File URL: http://www.fep.up.pt/investigacao/workingpapers/06.11.14_WP231_alvesbarbot.pdf
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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 231.

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Length: 31 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:por:fepwps:231
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Keywords: corporate governance; low cost carriers;

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Find related papers by JEL classification:
  • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
  • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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Cited by:

  1. Fageda, Xavier & Fernández-Villadangos, Laura, 2009. "Triggering competition in the Spanish airline market: The role of airport capacity and low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 36-40.

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