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Corporate Governance and Cartel formation

Listed author(s):
  • Suha Alawi

    ()

    (King Abdulaziz university)

Registered author(s):

    This paper examines the relationship between corporate governance and cartel formation, A firm?s participation in cartel depends upon the potential problems that may arise due to price fixing and the incentives provided to the management. The top levels of management such as the board of directors and the CEO are responsible for deciding if the firm will participate in the cartel and manage the corporate governance activities of collusive price fixing agreements. The study is focused on UK cartel firms which has the highest representation in the sample. A total number of 150 cartel firms in 52 cases from all around the world between the years 1990 to 2008 are involved in this study, of which 114 are UK firms. Therefore, this study is dominated by UK firms. The study concludes that UK-based cartel firms characterised by having larger board size compared to non-cartel firms; lower percentage of independent directors (non-executive); higher average of board remuneration; less likely that cartel is formed by family-owned and controlled firm (large shareholders); having older CEOs represented on the board; having CEO who served a less number of years as a director; less likely to have a female CEO represented; more likely to have CEOs who?s combined CEO-chairman position; and a higher average of CEOs bonuses and compensation packages.

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    File URL: http://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=2&rid=1246
    File Function: First version, 2014
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    Paper provided by International Institute of Social and Economic Sciences in its series Proceedings of Economics and Finance Conferences with number 0401246.

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    Length: 25 pages
    Date of creation: Jul 2014
    Publication status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 14-38
    Handle: RePEc:sek:iefpro:0401246
    Contact details of provider: Web page: http://iises.net/

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    11. Lynda Oswald & Valerie Suslow & Margaret Levenstein & Manuel Pastor, 2003. "International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies," Working Papers wp53, Political Economy Research Institute, University of Massachusetts at Amherst.
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    16. Buccirossi, Paolo & Spagnolo, Giancarlo, 2007. "Corporate Governance and Collusive Behaviour," CEPR Discussion Papers 6349, C.E.P.R. Discussion Papers.
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