Executive Remuneration and Corporate Divestment: Motivating Managers to Make Unpalatable Decisions
<heading id="h1" level="4" format="inline" implicit="no">Abstract: </heading>This study examines the impact of voluntary divestment on executive remuneration, using an unbalanced panel of 107 UK quoted companies over the period 1988 to 1993. It employs a dynamic compensation equation, with a vector of controls and alternative specifications of the divestment effect. The results show no general direct evidence of a remuneration process that rewards managers for downsizing their firms. Indeed the substantial pay-size elasticity implies the reverse. However, divestment does have a positive and significant effect in raising executive remuneration under a regime of strong corporate governance, defined in terms of the presence of a substantial blockholder. Copyright 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.
Year of publication: |
2007-06
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Authors: | Haynes, Michelle ; Thompson, Steve ; Wright, Mike |
Published in: |
Journal of Business Finance & Accounting. - Wiley Blackwell, ISSN 0306-686X. - Vol. 34.2007-06, 5-6, p. 792-818
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Publisher: |
Wiley Blackwell |
Saved in:
freely available
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