Dynamics in Ownership and Firm Survival: Evidence from Corporate Germany

"This study investigates the determinants of changes in corporate ownership and firm failure for German firms. We find that many of the determinants of failure also affect ownership changes in this bank-based economy. They include poor performance, weak corporate governance, high leverage, and small firm size. The ownership structure also plays a role for both events. Separate analyses of one of these events are therefore likely to miss important effects. The implications for the German corporate governance system are that the differences to countries with more market-based systems are not as pronounced as previously speculated." Copyright Blackwell Publishers Ltd, 2004.

Dividend Policy, Corporate Governance and the Managerial Entrenchment Hypothesis: An Empirical Analysis

This paper analyses the agency explanation for the cross-sectional variation of corporate dividend policy in the UK by looking at the managerial entrenchment hypothesis drawn from the agency literature. Consistent with predictions, a significant U-shaped relationship between dividend payout ratios and insider ownership is observed for a large (exceeding 600 firms) sample of UK companies and two distinct periods. These results strongly suggest the possibility of managerial entrenchment when insider ownership reaches a threshold of around 30%. Evidence is also presented that non-beneficial holdings by insiders can lead to entrenchment in conjunction with shares held beneficially. Copyright Blackwell Publishers Ltd, 2003.

The choice, design and strategic implications of executive incentive pay schemes at the time of an initial public offering: a UK perspective

This paper presents a critical analysis of the choice and design of executive pay incentive scheme arrangements implemented at the time of a company’s initial public offering. Using a unique sample of 311 entrepreneurial companies over a five year period (1998–2002) it discovers that 172 companies implement executive share option schemes for the first time at their initial public offering. Taking this sub-sample, the paper evaluates and analyses the strategic choices made with regard to incentive pay schemes by the board of directors at this crucial time in a company’s development. It finds that company’s choices are split between schemes that have performance targets linked to reward and others that are contrary to the guidelines of the UK’s Corporate Governance Code and best practice. Furthermore, it shows company characteristics that affect schemes and elaborates on the configuration of incentive schemes in respect of three critical elements: the performance target, comparator, and target level requirement for the shares to vest. In light of this, it proposes strategic reasons as to how these schemes might be set for initial public offerings and proposes that explanations for implementation are not underpinned by traditional agency theory but linked to a resource based view of the firm