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Ownership concentration, top management and board compensation

Author

Listed:
  • Marcos Barbosa Pinto
  • Ricardo Pereira Câmara Leal

Abstract

The degree of ownership concentration may influence executive and board compensation (Bebchuk & Fried, 2003). This article analyzes this relationship. Detailed information about top management and board compensation became available starting in 2010 through new Securities Commission filings. Linear regression models applied to a sample of 315 Brazilian companies traded on the national exchange indicate a negative and statistically significant economic correlation between executive compensation and the degree of ownership concentration. Ceteris paribus, companies with a lower degree of ownership concentration pay higher compensation to top executives. Family controlled companies pay more to their chief executive, but not to the managerial team as a whole, and the compensation of directors increases with a greater proportion of control group members or their relatives on the board. There was support for the Managerial Power Hypothesis in companies with a lower degree of ownership concentration and for the extraction of private benefits in companies where it is greater.

Suggested Citation

  • Marcos Barbosa Pinto & Ricardo Pereira Câmara Leal, 2013. "Ownership concentration, top management and board compensation," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 17(3), pages 304-324.
    • Handle: RePEc:abg:anprac:v:17:y:2013:i:3:991
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    File URL: https://rac.anpad.org.br/index.php/rac/article/view/991/987
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    File URL: https://rac.anpad.org.br/index.php/rac/article/download/991/987
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    References listed on IDEAS

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    2. Lucian Arye Bebchuk & Jesse M. Fried & David I. Walker, 2002. "Managerial Power and Rent Extraction in the Design of Executive Compensation," NBER Working Papers 9068, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Akram, Farheen & Abrar ul haq, Muhammad, 2018. "Assessing the Effect of Managerial Power on Firm Performance through the Perceptual Lens of Executive Remuneration," MPRA Paper 100050, University Library of Munich, Germany, revised 2019.
    2. Ricardo Pereira Câmara Leal & André L. Carvalhal & Ana Paula Iervolino, 2015. "One Decade of Evolution of Corporate Governance Practices in Brazil," Brazilian Review of Finance, Brazilian Society of Finance, vol. 13(1), pages 134-161.
    3. Jebreel Mohammad Al-Al-Msiedeen & Fawzi A. Al Sawalqa, 2021. "Ownership Structure and CEO Compensation: Evidence from Jordan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(5), pages 365-383, May.
    4. Claudine Salgado & Guilherme Schneider & Cristiano M. Costa, 2022. "Does board interlock affect CEO compensation? Evidence from companies listed in the Brazilian stock exchange," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(4), pages 444-465, December.
    5. Milene B Alves & Ricardo P C Leal, 2016. "Board characteristics and compensation in Brazilian listed companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 13(4), pages 309-328, November.
    6. Ali Saleh Ahmed Alarussi, 2021. "Effectiveness, Efficiency and Executive Directors’ Compensation Among Listed Companies in Malaysia," SAGE Open, , vol. 11(4), pages 21582440211, October.

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