Abstract
We examine how the unique agency environment in founding family firms influences compensation incentives for executives that are not family members. Nonfamily executives receive weaker pay-for-performance incentives when family members serve as executives or board chair and weaker risk-taking incentives if there are family executives. Family firms do not structure compensation to include tournament incentives when there are family heirs. Family ownership exerts a greater influence on compensation incentives than nonfamily blockholders, which suggest that family ownership is different than other concentrated ownership. Altogether, the results suggest that compensation structure reflects a tradeoff between shareholder-manager conflicts and family-nonfamily shareholder conflicts.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
