Managerial incentives and strategic choices of firms with different ownership structures
Managerial incentives and strategic choices of firms with different ownership structures
We examine how ownership structure affects managerial incentive alignment mechanisms and strategic objectives. We compare large Indian firms with dispersed equity ownership with business-group affiliates operating within the same institutional frameworks. We find that the performance sensitivity of CEO pay and turnover differ significantly across group affiliates and stand-alone firms. The strategic choices of firms also differ in response to managerial incentives. However, we find that, regardless of those differences, firm performance is similar for both types of firms. Overall, this paper suggests that ownership structure and managerial incentives can adjust to optimize strategic choices and firm performance.
314-330
Banerjee, Shantanu
cc6fab6c-1153-453a-9462-3c7b7b6be597
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
1 December 2017
Banerjee, Shantanu
cc6fab6c-1153-453a-9462-3c7b7b6be597
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
Banerjee, Shantanu and Homroy, Swarnodeep
(2017)
Managerial incentives and strategic choices of firms with different ownership structures.
Journal of Corporate Finance, 48, .
(doi:10.1016/j.jcorpfin.2017.10.001).
Abstract
We examine how ownership structure affects managerial incentive alignment mechanisms and strategic objectives. We compare large Indian firms with dispersed equity ownership with business-group affiliates operating within the same institutional frameworks. We find that the performance sensitivity of CEO pay and turnover differ significantly across group affiliates and stand-alone firms. The strategic choices of firms also differ in response to managerial incentives. However, we find that, regardless of those differences, firm performance is similar for both types of firms. Overall, this paper suggests that ownership structure and managerial incentives can adjust to optimize strategic choices and firm performance.
More information
Accepted/In Press date: 5 October 2017
e-pub ahead of print date: 10 October 2017
Published date: 1 December 2017
Identifiers
Local EPrints ID: 499318
URI: http://eprints.soton.ac.uk/id/eprint/499318
ISSN: 0929-1199
PURE UUID: a6ac14d7-f991-4d73-af0c-c7d0148dd42d
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Date deposited: 17 Mar 2025 17:31
Last modified: 24 Apr 2025 02:14
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Author:
Shantanu Banerjee
Author:
Swarnodeep Homroy
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