IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/v40y1997i1p261-88.html
   My bibliography  Save this article

Ownership, Regulation, and Managerial Monitoring in the Electric Utility Industry

Author

Listed:
  • Geddes, R Richard

Abstract

This article addresses three issues. First, the sensitivity of managerial turnover in investor owned electric utilities to changes in owner and customer wealth is examined Accounting measures of firm performance, allowed returns, and changes in outputs are included. A logit model is estimated to test the hypothesis that managers in regulated utilities are monitored by owners on the basis of regulatory rent-seeking behavior, versus a "regulatory slack" hypothesis. The evidence: presented here suggests that there is slack with respect to owner wealth, but that changes in customer wealth are important in determining turnover. Second, government owned firms are included in the investigation of turnover and performance, and the rate of managerial turnover is compared. Third, because significant firm size effects were found, estimates of managerial turnover reported in the Journal of Political Economy were replicated. The inclusion of a firm size variable has important implications for the conclusions reported there. Copyright 1997 by the University of Chicago.

Suggested Citation

  • Geddes, R Richard, 1997. "Ownership, Regulation, and Managerial Monitoring in the Electric Utility Industry," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 261-288, April.
  • Handle: RePEc:ucp:jlawec:v:40:y:1997:i:1:p:261-88
    DOI: 10.1086/467373
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/467373
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: https://libkey.io/10.1086/467373?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barro, Jason R & Barro, Robert J, 1990. "Pay, Performance, and Turnover of Bank CEOs," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 448-481, October.
    2. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    4. Warner, Jerold B. & Watts, Ross L. & Wruck, Karen H., 1988. "Stock prices and top management changes," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 461-492, January.
    5. Frech, H E, III, 1976. "The Property Rights Theory of the Firm: Empirical Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 143-152, February.
    6. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, vol. 73(1), pages 82-97, March.
    7. Crain, W Mark & Zardkoohi, Asghar, 1978. "A Test of the Property-Rights Theory of the Firm: Water Utilities in the United States," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 395-408, October.
    8. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
    9. De Alessi, Louis, 1974. "Managerial Tenure under Private and Government Ownership in the Electric Power Industry," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 645-653, May/June.
    10. Crain, W Mark & Zardkoohi, Asghar, 1980. "X-Inefficiency and Nonpecuniary Rewards in a Rent-Seeking Society: A Neglected Issue in the Property Rights Theory of the Firm," American Economic Review, American Economic Association, vol. 70(4), pages 784-792, September.
    11. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
    12. Coughlan, Anne T. & Schmidt, Ronald M., 1985. "Executive compensation, management turnover, and firm performance : An empirical investigation," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 43-66, April.
    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. Francesc Trillas, 2004. "The structure of corporate ownership in privatized utilities," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 257-284, May.
    2. Burks, Stephen V & Guy, Frederick & Maxwell, Benjamin, 2004. "7. Shifting Gears In The Corner Office: Deregulation And The Earnings Of Trucking Executives," Research in Transportation Economics, Elsevier, vol. 10(1), pages 137-164, January.
    3. Nancy L. Rose & Catherine Wolfram, 2000. "Regulating Executive Pay: Using the Tax Code to Influence CEO Compensation," NBER Working Papers 7842, National Bureau of Economic Research, Inc.
    4. Michael E. Sykuta, 2010. "Empirical Methods in Transaction Cost Economics," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 16, Edward Elgar Publishing.
    5. Michael E. Bradbury & Jill Hooks, 2015. "Ownership and Performance in a Lightly Regulated Environment," Australian Accounting Review, CPA Australia, vol. 25(1), pages 100-112, March.
    6. Thadeu Gasparetto & Angel Barajas, 2022. "Wage Dispersion and Team Performance: The Moderation Role of Club Size," Journal of Sports Economics, , vol. 23(5), pages 548-566, June.
    7. Bertrand V. Quelin & Sandro Cabral & Sergio Lazzarini & Ilze Kivleniece, 2019. "The Private Scope in Public–Private Collaborations: An Institutional and Capability-Based Perspective," Organization Science, INFORMS, vol. 30(4), pages 831-846, July.

    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. Engel, Ellen & Hayes, Rachel M. & Wang, Xue, 2003. "CEO turnover and properties of accounting information," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 197-226, December.
    2. Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1997. "Ownership structure and top executive turnover," Journal of Financial Economics, Elsevier, vol. 45(2), pages 193-221, August.
    3. Hubbard, R. Glenn & Palia, Darius, 1995. "Executive pay and performance Evidence from the U.S. banking industry," Journal of Financial Economics, Elsevier, vol. 39(1), pages 105-130, September.
    4. Benoît Pigé, 1996. "The CEO turnover probability: a measure of the Board's power of revocation [La probabilité de rotation des PDG: une mesure du pouvoir de révocation du conseil d'administration]," Post-Print hal-02175779, HAL.
    5. Bendeck, Yvette M. & Waller, Edward R., 1999. "The Wealth Effects of Non-Senior Management Departures from Investment Banks," Journal of Business Research, Elsevier, vol. 46(1), pages 95-105, September.
    6. repec:eee:labchp:v:3:y:1999:i:pb:p:2485-2563 is not listed on IDEAS
    7. Martin Conyon & Annita Florou, 2002. "Top executive dismissal, ownership and corporate performance," Accounting and Business Research, Taylor & Francis Journals, vol. 32(4), pages 209-225.
    8. Leslie Eldenburg & Benjamin E. Hermalin & Michael S. Weisbach & Marta Wosinska, 2001. "Hospital Governance, Performance Objectives, and Organizational Form," NBER Working Papers 8201, National Bureau of Economic Research, Inc.
    9. Stefano D'Addona & Axel Kind, 2011. "Forced Manager Turnovers In English Soccer Leagues: A Long-Term Perspective," Working Papers 1011, CREI Università degli Studi Roma Tre, revised 2011.
    10. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    11. Nadide BANU OLCAY GÜNER, 2023. "Incentivizing CEOs via pay and forced turnover: Do tenure and managerial ability matter?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(634), S), pages 37-66, Spring.
    12. Cook, Douglas O. & Hogan, Arthur & Kieschnick, Robert, 2004. "A study of the corporate governance of thrifts," Journal of Banking & Finance, Elsevier, vol. 28(6), pages 1247-1271, June.
    13. Dirk Jenter & Katharina Lewellen, 2021. "Performance-Induced CEO Turnover [The “Wall Street Walk” and shareholder activism: Exit as a form of voice]," The Review of Financial Studies, Society for Financial Studies, vol. 34(2), pages 569-617.
    14. Renneboog, L.D.R. & Trojanowski, G., 2002. "The Managerial Labor Market and the Governance Role of Shareholder Control Structures in the UK," Discussion Paper 2002-68, Tilburg University, Center for Economic Research.
    15. Lausten, Mette, 2002. "CEO turnover, firm performance and corporate governance: empirical evidence on Danish firms," International Journal of Industrial Organization, Elsevier, vol. 20(3), pages 391-414, March.
    16. Goyal, Vidhan K. & Park, Chul W., 2002. "Board leadership structure and CEO turnover," Journal of Corporate Finance, Elsevier, vol. 8(1), pages 49-66, January.
    17. Barro, Jason R & Barro, Robert J, 1990. "Pay, Performance, and Turnover of Bank CEOs," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 448-481, October.
    18. Alberto Chong & Florencio López-de-Silanes, 2007. "Investor Protection and Corporate Governance : Firm-Level Evidence Across Latin America," World Bank Publications - Books, The World Bank Group, number 6769.
    19. Miriam Flickinger & Markus Wrage & Anja Tuschke & Rudi Bresser, 2016. "How CEOs protect themselves against dismissal: A social status perspective," Strategic Management Journal, Wiley Blackwell, vol. 37(6), pages 1107-1117, June.
    20. Benoît Pigé, 1997. "Le marché boursier réagit-il à l'annonce des changements de dirigeants ?," Post-Print hal-02175842, HAL.
    21. Grant, Simon & King, Stephen & Polak, Ben, 1996. "Information Externalities, Share-Price Based Incentives and Managerial Behaviour," Journal of Economic Surveys, Wiley Blackwell, vol. 10(1), pages 1-21, March.

    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:ucp:jlawec:v:40:y:1997:i:1:p:261-88. 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: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    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.