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Corporate Governance and Cartel formation

Author

Listed:
  • Suha Alawi

    () (King Abdulaziz university)

Abstract

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.

Suggested Citation

  • Suha Alawi, 2014. "Corporate Governance and Cartel formation," Proceedings of Economics and Finance Conferences 0401246, International Institute of Social and Economic Sciences.
  • Handle: RePEc:sek:iefpro:0401246
    as

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    File URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=2&rid=1246
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Cartels; Antitrust agreements; Corporate governance; Competition; Agency theory.;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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