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Author Andreas, Jörn Michael ♦ Rapp, Marc Steffen ♦ Wolff, Michael
Source EconStor
Content type Text
Publisher Center for Entrepreneurial and Financial Studies (CEFS)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword Director Compensation ♦ Corporate Governance ♦ Outside Directors ♦ Two-tier System ♦ Agency Costs ♦ Führungskräfte ♦ Vergütungssystem ♦ Corporate Governance ♦ Vertragstheorie ♦ Prinzipal-Agent-Theorie ♦ Compensation Packages; Payment Methods ♦ Corporate Finance and Governance: General ♦ Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Abstract Building on a unique panel data set of German Prime Standard companies for the period 2005-2008, this paper investigates the influencing factors of both director compensation levels and structure, i.e. the probability of performance-based compensation. Drawing on agency theory arguments and previous literature, we analyze a comprehensive group of determinants, including detailed corporate performance, ownership and board characteristics. While controlling for unobserved heterogeneity, we find director compensation to be set in ways consistent with optimal contracting theory. I.e. compensation is systematically structured to mitigate agency conflicts and to encourage effective monitoring. Thus, our results indicate that similar types of agency conflicts exist in the German two-tier setting.
Part of series CEFS working paper series x2010-06
Learning Resource Type Article
Publisher Date 2010-01-01
Publisher Place Munich
Rights Holder