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dc.contributor.authorRenneboog, Luc
dc.contributor.authorTrojanowski, Grzegorz
dc.date.accessioned2015-06-01T15:50:13Z
dc.date.issued2011
dc.description.abstractWe simultaneously analyze two mechanisms of the managerial labor market (CEO turnover and remuneration schemes) in two different regulatory regimes, namely before and after the sweeping governance reforms adopted in the UK in the 1990s. We employ sample selection models to examine firms in a pre-Cadbury Code period (1988-1993) and a post-Combined Code period (1998-2004). CEOs’ compensation and CEO replacement are performance-sensitive in both periods. There is little evidence of outside shareholder monitoring, whereas powerful CEOs successfully resist replacement irrespective of corporate performance. With regard to CEO remuneration, we sketch a nuanced picture as we find some evidence supporting the alignment of interests hypothesis, but also supporting the managerial power or skimming model for managerial remuneration practices in the UK prior to the governance reforms. In particular, equity-owning CEOs compensate disappointing stock performance by augmenting their monetary compensation. Our results are consistent with the widely perceived failure of internal governance mechanism in tackling the agency problems associated with managerial pay: these mechanisms have relatively little impact on executive remuneration. We also conclude that the regulatory effort undertaken in the UK over the 1990s has had at best a moderate effect on increasing executives’ accountability and performance sensitivity of their turnover.en_GB
dc.identifier.urihttp://hdl.handle.net/10871/17365
dc.language.isoenen_GB
dc.publisherUniversity of Exeteren_GB
dc.relation.urlhttp://dx.doi.org/10.2139/ssrn.1723462en_GB
dc.subjectcorporate governanceen_GB
dc.subjectagency costsen_GB
dc.subjectCEO remunerationen_GB
dc.subjectCEO turnoveren_GB
dc.subjectownership and controlen_GB
dc.subjectentrenchmenten_GB
dc.titleManagerial remuneration and disciplining in the UK: a tale of two governance regimesen_GB
dc.typeWorking Paperen_GB
dc.date.available2015-06-01T15:50:13Z
dc.descriptionWorking paper. Earlier versions available as ECGI Finance Working Paper no. 301/2010, http://ssrn.com/abstract=1723462en_GB
dc.descriptionArticleen_GB


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