RT Generic
T1 Corporate governance when managers set their own pay
A1 Ruiz-Verdú, Pablo
A2 Universidad Carlos III de Madrid. Departamento de Economía de la Empresa, 
AB This paper presents a model of the firm in which the manager has discretion over his owncompensation, constrained only by the threat of shareholder intervention. The model addressestwo questions: How does shareholder power affect managers' compensation and their incentives tomaximize firm value? And, which is the optimal level of shareholder power? Increasingshareholder power leads to lower managerial pay, yet it also weakens managers' incentives tomaximize value. The model shows that, because of this incentive effect, restricting shareholderpower is necessary to obtain financing, and offers predictions about the relation between theoptimal level of shareholder power, performance and firm characteristics.
YR 2007
FD 2007-02
LK https://hdl.handle.net/10016/641
UL https://hdl.handle.net/10016/641
LA eng
LA eng
DS e-Archivo
RD 3 may. 2024