The Measurement of Firm Ownership and its Effect on Managerial Pay

Wolfgang Eggert, Alfons Weichenrieder and Jeremy Edwards

No 1, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: This paper uses German evidence to address two questions about corporate governance. The effects of ownership on corporate governance have received much recent attention, but very little of this has been devoted to the appropriate way to measure firm ownership. The results of this paper show that the conclusions reached about the effects of ownership on corporate governance can depend critically on the particular ownership measure used, and that the widely-used weakest-link principle is wholly unsatisfactory as a means of dealing with the issues raised by pyramid ownership structures. The paper also shows that greater ownership concentration typically weakens the link between managerial pay and firm profitability. This is inconsistent with the hypothesis, emphasised in the recent literature on the USA, that large owners are a complement to, rather than a substitute for, such a link.

Keywords: Firm Ownership; Managerial Pay (search for similar items in EconPapers)
Pages: 33 pages
Date: 2006-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/ciepap/WP01.pdf First version, 2006 (application/pdf)

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Working Paper: The Measurement of Firm Ownership and its Effect on Managerial Pay (2006)
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