Executive Compensation and Corporate Performance in Electric and Gas Utilities
Anup Agrawal,
Anil K. Makhija and
Gershon Mandelker ()
Financial Management, 1991, vol. 20, issue 4
Abstract:
We study how the composition of the board of directors and incentives from direct shareholdings affect firm performance in a sample of large, publicly traded firms. We use an instrumental variables approach that controls directly for endogeneity of both shareholdings and board composition. We find no evidence that cross-sectional patterns in board composition are correlated with cross-sectional patterns in performance. This result is consistent with a number of different explanations, all of which suggest that potential regulation of board composition would not be beneficial. Similar to the previous literature, we find a nonmonotonic relation between ownership and performance. Our results suggest that this relation is not a product of the endogeneity of shareholdings. Finally, we find that firm performance suffers if the CEO stays on too long (beyond 15 years).
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:agrawal91
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