IDEAS home Printed from https://ideas.repec.org/a/bla/corgov/v16y2008i4p359-374.html
   My bibliography  Save this article

Institutions and Voluntary Compliance: The Disclosure of Individual Executive Pay in Germany

Author

Listed:
  • Amon Chizema

Abstract

Manuscript Type: Empirical Research Question/Issue: This study seeks to understand why the disclosure of individual executive compensation, as recommended by the German Code of Corporate Governance, met with resistance in some firms while being a welcome innovation for others. Employing the theoretical perspective of institutional inertia and change, this paper identifies the characteristics of a firm likely to embrace or resist a management practice imported from an Anglo‐American system of corporate governance. Research Findings/Results: Using data on large German firms for the years 2002 through 2005, the study shows that institutional ownership, dispersed ownership, state ownership, prior adoption of shareholder value‐oriented practices, and firm size are positively and significantly associated with the disclosure of individual executive compensation. On the other hand, the size of the supervisory board and firm age are negatively and significantly associated with individual disclosure of executive compensation. Theoretical Implications: This study provides empirical support for the institutional inertia or change perspective at the national level for the adoption of contested management practices, taken from the Anglo‐American system and translated to the German model. As such, it adds to the argument on convergence/divergence in comparative corporate governance literature, as well as support for the neo‐institutional perspective in helping to further understand institutional change. Practical Implications: This study offers insights to policy makers who aim to create an institutional environment that accepts corporate governance practices translated or negotiated from a different variety of capitalism. In addition, it provides a useful synthesis of the relevance and effectiveness of codes of corporate governance, thus helping policy makers to recommend continuation with the current elements of the code or to make such provisions compulsory.

Suggested Citation

  • Amon Chizema, 2008. "Institutions and Voluntary Compliance: The Disclosure of Individual Executive Pay in Germany," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(4), pages 359-374, July.
    • Handle: RePEc:bla:corgov:v:16:y:2008:i:4:p:359-374
    DOI: 10.1111/j.1467-8683.2008.00689.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8683.2008.00689.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8683.2008.00689.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Henry Hansmann & Reinier Kraakman, 2000. "The End Of History For Corporate Law," Yale School of Management Working Papers ysm136, Yale School of Management, revised 01 Feb 2001.
    2. Franks, Julian & Mayer, Colin, 2001. "Ownership and Control of German Corporations," The Review of Financial Studies, Society for Financial Studies, vol. 14(4), pages 943-977.
    3. Robert G Cooper & Elko J Kleinschmidt, 1985. "The Impact of Export Strategy on Export Sales Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 16(1), pages 37-55, March.
    4. Wruck, Karen Hopper, 1990. "Financial distress, reorganization, and organizational efficiency," Journal of Financial Economics, Elsevier, vol. 27(2), pages 419-444, October.
    5. Trevor Buck & Azura Shahrim, 2005. "The translation of corporate governance changes across national cultures: the case of Germany," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 42-61, January.
    6. Masahiko Aoki, 2013. "Endogenizing institutions and institutional changes," Chapters, in: Comparative Institutional Analysis, chapter 16, pages 267-297, Edward Elgar Publishing.
    7. Gerhard Cromme, 2005. "Corporate Governance in Germany and the German Corporate Governance Code," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(3), pages 362-367, May.
    8. Axel V. Werder & Till Talaulicar & Georg L. Kolat, 2005. "Compliance with the German Corporate Governance Code: an empirical analysis of the compliance statements by German listed companies," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(2), pages 178-187, March.
    9. Eric Nowak & Roland Rott & Till G. Mahr, 2006. "The (Ir)relevance of Disclosure of Compliance with Corporate Governance Codes - Evidence from the German Stock Market," Swiss Finance Institute Research Paper Series 06-11, Swiss Finance Institute.
    10. Johannes M. Pennings & Farid Harianto, 1992. "Technological Networking and Innovation Implementation," Organization Science, INFORMS, vol. 3(3), pages 356-382, August.
    11. Crouch, Colin, 2005. "Capitalist Diversity and Change: Recombinant Governance and Institutional Entrepreneurs," OUP Catalogue, Oxford University Press, number 9780199286652.
    12. Fernando F. Suarez & Rogelio Oliva, 2005. "Environmental change and organizational transformation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(6), pages 1017-1041, December.
    13. Anja Tuschke & Wm. Gerard Sanders, 2003. "Antecedents and consequences of corporate governance reform: the case of Germany," Strategic Management Journal, Wiley Blackwell, vol. 24(7), pages 631-649, July.
    14. Suddaby, Roy & Cooper, David J. & Greenwood, Royston, 2007. "Transnational regulation of professional services: Governance dynamics of field level organizational change," Accounting, Organizations and Society, Elsevier, vol. 32(4-5), pages 333-362.
    15. David Seidl, 2006. "Regulating organizations through codes of corporate governance," Working Papers wp338, Centre for Business Research, University of Cambridge.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agata Wieczorek, 2022. "The transparency of remuneration policy in financial holding companies based on the example of the UniCredit Group," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(2), pages 173-198, June.
    2. Lakhwinder Singh Kang & Payal, 2018. "Managerial Remuneration in India: Analysing Trends before and during the Economic Slowdown," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 43(3), pages 156-168, August.
    3. Melis, Andrea & Gaia, Silvia & Carta, Silvia, 2015. "Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure," The British Accounting Review, Elsevier, vol. 47(1), pages 66-84.
    4. Maria Aluchna & Tomasz Kuszewski, 2020. "Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board," JRFM, MDPI, vol. 13(10), pages 1-21, October.
    5. Hearn, Bruce, 2013. "The determinants of director remuneration, executive tenure and individual executive disclosure in North African IPO firms," Research in International Business and Finance, Elsevier, vol. 27(1), pages 162-182.
    6. Jakob Utgård, 2018. "Retail Chains’ Corporate Social Responsibility Communication," Journal of Business Ethics, Springer, vol. 147(2), pages 385-400, January.
    7. Amon Chizema & Xiaohui Liu & Jiangyong Lu & Lan Gao, 2015. "Politically connected boards and top executive pay in Chinese listed firms," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 890-906, June.
    8. Liu, Xiaohui & Lu, Jiangyong & Chizema, Amon, 2014. "Top executive compensation, regional institutions and Chinese OFDI," Journal of World Business, Elsevier, vol. 49(1), pages 143-155.
    9. Chizema, Amon, 2010. "Early and late adoption of American-style executive pay in Germany: Governance and institutions," Journal of World Business, Elsevier, vol. 45(1), pages 9-18, January.
    10. Louise Osemeke & Emmanuel Adegbite, 2016. "Regulatory Multiplicity and Conflict: Towards a Combined Code on Corporate Governance in Nigeria," Journal of Business Ethics, Springer, vol. 133(3), pages 431-451, February.
    11. Tariq, Yasir Bin & Abbas, Zaheer, 2013. "Compliance and multidimensional firm performance: Evaluating the efficacy of rule-based code of corporate governance," Economic Modelling, Elsevier, vol. 35(C), pages 565-575.
    12. Maria Aluchna & Tomasz Kuszewski, 2022. "Responses to corporate governance code: evidence from a longitudinal study," Review of Managerial Science, Springer, vol. 16(6), pages 1945-1978, August.
    13. Franklin Nakpodia & Emmanuel Adegbite & Kenneth Amaeshi & Akintola Owolabi, 2018. "Neither Principles Nor Rules: Making Corporate Governance Work in Sub-Saharan Africa," Journal of Business Ethics, Springer, vol. 151(2), pages 391-408, August.
    14. Cieslak, Katarzyna & Hamberg, Mattias & Vural, Derya, 2021. "Executive compensation disclosure, ownership concentration and dual-class firms: An analysis of Swedish data," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 45(C).
    15. Christian Engelen, 2015. "The effects of managerial discretion on moral hazard related behaviour: German evidence on agency costs," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(4), pages 927-960, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chizema, Amon, 2010. "Early and late adoption of American-style executive pay in Germany: Governance and institutions," Journal of World Business, Elsevier, vol. 45(1), pages 9-18, January.
    2. Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
    3. Dirk Akkermans & Hans Van Ees & Niels Hermes & Reggy Hooghiemstra & Gerwin Van der Laan & Theo Postma & Arjen Van Witteloostuijn, 2007. "Corporate Governance in the Netherlands: an overview of the application of the Tabaksblat Code in 2004," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1106-1118, November.
    4. Oehr, Tim-Frederik & Zimmermann, Jochen, 2012. "Accounting and the welfare state: The missing link," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(2), pages 134-152.
    5. Amon Chizema & Jootae Kim, 2010. "Outside Directors on Korean Boards: Governance and Institutions," Journal of Management Studies, Wiley Blackwell, vol. 47(1), pages 109-129, January.
    6. Ruth V. Aguilera & Igor Filatotchev & Howard Gospel & Gregory Jackson, 2008. "An Organizational Approach to Comparative Corporate Governance: Costs, Contingencies, and Complementarities," Organization Science, INFORMS, vol. 19(3), pages 475-492, June.
    7. Toru Yoshikawa & Lai Si Tsui-Auch & Jean McGuire, 2007. "Corporate Governance Reform as Institutional Innovation: The Case of Japan," Organization Science, INFORMS, vol. 18(6), pages 973-988, December.
    8. David Seidl & Paul Sanderson & John Roberts, 2009. "Applying 'Comply-or-Explain': Conformance with Codes of Corporate Governance in the UK and Germany," Working Papers wp389, Centre for Business Research, University of Cambridge.
    9. Ilya Okhmatovskiy, 2017. "Self-regulation of corporate governance in Russian firms: translating the national standard into internal policies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(2), pages 499-532, June.
    10. Elsas, Ralf & Krahnen, Jan Pieter, 2003. "Universal Banks and Relationships with Firms," CFS Working Paper Series 2003/20, Center for Financial Studies (CFS).
    11. Mario, Cuevas, 2007. "A Practical Guide to the Assessment of the Vulnerability of the Non-Financial Private Sector," MPRA Paper 1375, University Library of Munich, Germany.
    12. Marc Goergen & Miguel Manjon & Luc Renneboog, 2008. "Is the German system of corporate governance converging towards the Anglo-American model?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 12(1), pages 37-71, March.
    13. Andres, Christian & Theissen, Erik, 2008. "Setting a fox to keep the geese -- Does the comply-or-explain principle work?," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 289-301, June.
    14. Deakin, Simon & Sarkar, Prabirjit & Siems, Mathias, 2018. "Is There a Relationship Between Shareholder Protection and Stock Market Development?," Journal of Law, Finance, and Accounting, now publishers, vol. 3(1), pages 115-146, May.
    15. Marc Goergen & Christine A. Mallin & Eve Mitleton-Kelly & Ahmed Al-Hawamdeh & Iris H-Y Chiu, 2010. "Corporate Governance and Complexity Theory," Books, Edward Elgar Publishing, number 13927.
    16. Priya P. Lele & Mathias M. Siems, 2009. "Shareholder Protection: A Leximetric Approach," Chapters, in: Thankom Gopinath Arun & John Turner (ed.), Corporate Governance and Development, chapter 10, Edward Elgar Publishing.
    17. Adegbite, Emmanuel & Amaeshi, Kenneth & Nakajima, Chizu, 2013. "Multiple influences on corporate governance practice in Nigeria: Agents, strategies and implications," International Business Review, Elsevier, vol. 22(3), pages 524-538.
    18. Collins G. Ntim & Kwaku K. Opong & Jo Danbolt & Dennis A. Thomas, 2012. "Voluntary corporate governance disclosures by post‐Apartheid South African corporations," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(2), pages 122-144, September.
    19. Laura T. Starks & Kelsey D. Wei, 2013. "Cross-Border Mergers and Differences in Corporate Governance," International Review of Finance, International Review of Finance Ltd., vol. 13(3), pages 265-297, September.
    20. Emilia Tomczyk & Maria Aluchna, 2015. "Shareholder structure and compliance with the board best practice: econometric analysis," Applied Econometrics Papers, Department of Applied Econometrics, Warsaw School of Economics, vol. 2(1), pages 51-75.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:corgov:v:16:y:2008:i:4:p:359-374. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0964-8410&site=1 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.