CEO incentives in European energy utilities: evidence from regulated versus unregulated firms

Carlo Cambini (), Sara De Masi () and Laura Rondi
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Carlo Cambini: Politecnico di Torino
Sara De Masi: University of Florence

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2016, vol. 43, issue 2, No 2, 127-155

Abstract: Abstract This paper studies the effect of incentive mechanisms provided by economic regulation and CEO compensation in European energy firms. We investigate the differences in CEO pay-for-performance sensitivity across regulated and unregulated firms on CEO monetary incentives. Using various measures of firm performance, we find that CEO pay-for-performance sensitivity is lower in regulated companies. These results hold when we control for national corporate governance variables (investor protection, legal origin, disclosure requirements and contract enforcement). Our findings suggest that incentive compensation is a weaker incentive mechanism for firms operating in regulated and less-competitive markets.

Keywords: Corporate governance; CEO compensation; Pay-for-performance sensitivity; Regulation; European energy utilities (search for similar items in EconPapers)
JEL-codes: G3 G38 J33 L51 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40812-016-0028-7

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