Corporate governance when managers set their own pay

Ruiz-Verdú, Pablo

Publication:
Corporate governance when managers set their own pay

dc.affiliation.dpto	UC3M. Departamento de Economía de la Empresa	es
dc.contributor.author	Ruiz-Verdú, Pablo
dc.contributor.editor	Universidad Carlos III de Madrid. Departamento de Economía de la Empresa
dc.date.accessioned	2007-03-06T09:15:29Z
dc.date.available	2007-03-06T09:15:29Z
dc.date.issued	2007-02
dc.description.abstract	This paper presents a model of the firm in which the manager has discretion over his own compensation, constrained only by the threat of shareholder intervention. The model addresses two questions: How does shareholder power affect managers' compensation and their incentives to maximize firm value? And, which is the optimal level of shareholder power? Increasing shareholder power leads to lower managerial pay, yet it also weakens managers' incentives to maximize value. The model shows that, because of this incentive effect, restricting shareholder power is necessary to obtain financing, and offers predictions about the relation between the optimal level of shareholder power, performance and firm characteristics.
dc.format.extent	451035 bytes
dc.format.mimetype	application/pdf
dc.identifier.repec	wb070803
dc.identifier.uri	https://hdl.handle.net/10016/641
dc.language.iso	eng
dc.language.iso	eng
dc.relation.ispartofseries	UC3M Working papers. Business Economics
dc.relation.ispartofseries	07-03
dc.rights	Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRights	open access
dc.rights.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.eciencia	Empresa
dc.subject.other	Executive compensation
dc.subject.other	Corporate governance
dc.subject.other	Shareholder power
dc.subject.other	Managerial discretion over pay
dc.title	Corporate governance when managers set their own pay
dc.type	working paper	*
dspace.entity.type	Publication