Ownership concentration, top management and board compensation

Marcos Barbosa Pinto and Ricardo Pereira Câmara Leal

RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), 2013, vol. 17, issue 3, 304-324

Abstract: The degree of ownership concentration may influence executive and board compensation (Bebchuk & Fried, 2003). This article analyzes this relationship. Detailed information about top management and board compensation became available starting in 2010 through new Securities Commission filings. Linear regression models applied to a sample of 315 Brazilian companies traded on the national exchange indicate a negative and statistically significant economic correlation between executive compensation and the degree of ownership concentration. Ceteris paribus, companies with a lower degree of ownership concentration pay higher compensation to top executives. Family controlled companies pay more to their chief executive, but not to the managerial team as a whole, and the compensation of directors increases with a greater proportion of control group members or their relatives on the board. There was support for the Managerial Power Hypothesis in companies with a lower degree of ownership concentration and for the extraction of private benefits in companies where it is greater.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:abg:anprac:v:17:y:2013:i:3:991

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