Does codetermination affect the composition of variable versus fixed parts of executive compensation?

Katharina Dyballa and Kornelius Kraft

No 15-053, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Contrary to previous literature we hypothesize that interests of labor may well - like that of shareholders - aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientated decisions. We compile unique panel data on executive compensation over the periods 2006 to 2011 for 405 listed companies and use a Hausman-Taylor approach to estimate the effect of codetermination on the compensation design. Finally, codetermination has a significantly positive effect on performance-based components of compensation, which supports our hypothesis.

Keywords: Executive Compensation; Codetermination; Principal-Agent Theory; Corporate Governance; Hausman-Taylor (search for similar items in EconPapers)
JEL-codes: C33 G32 J52 L20 M12 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-ger and nep-hrm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:15053

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