Ownership and corporate wage policy: the signal and its strength

Miroslav Verbič and Marko Ogorevc

Applied Economics, 2016, vol. 48, issue 17, 1583-1590

Abstract: We argue that identification and proper specification of ownership links among firms is an important factor and is affecting firm performance on different dimensions. We focus on the corporate wage policy, where we show that firms with same stockholders have similar average labour costs after controlling for standard factors of the wage equation. Moreover, we propose new measures of stockholders’ ability to influence firms’ decision; signal and its strength. The signal measures stockholder’s preferences over a given corporate policy, while the strength function describes stockholder’s ability to influence a firms’ corporate policy.

Date: 2016
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DOI: 10.1080/00036846.2015.1103037

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