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Alexander Wagner, Christoph Wenk Agency versus Hold-up: Benefits and Costs of Shareholder Rights (14 May 2018) Available at ECGI: https://ecgi.global/working-paper/agency-versus-hold-benefits-and-costs-shareholder-rights
A set of policy experiments regarding binding say-on-pay in Switzerland sheds light on the hitherto mostly theoretical argument that shareholders may prefer to have limits on their own power.
The empirical evidence suggests a trade-off: Binding say-on-pay provides shareholders with an enhanced ability to ensure alignment; but when shareholders can (partially) set pay ex post, this may distort ex ante managerial incentives for extra-contractual, firm-specific investments. These findings inform the design of policy. The direct-democratic process by which say-on-pay was introduced in Switzerland also highlights the conflicts between society and shareholders when it comes to executive compensation.
We study a wide-spread yet unexplored corporate governance phenomenon: the pledging of company stock by insiders as collateral for personal bank loans. Utilizing a regulatory change that exogenously decreases pledging, we document a negative...Read more
A widely accepted principle in finance is that good corporate governance is associated with higher firm value. However, what is “good governance” and whether the same set of good governance practices can be universally adopted are fiercely...Read more
An unintended consequence of recent board governance reforms is that U.S firms are increasingly tapping into pools of older independent directors (OIDs), causing their boards to become substantially older. We document that OIDs display monitoring...Read more
Preemptive rights are thought to protect minority shareholders from cheap-stock tunneling by a controlling shareholder. We show that preemptive rights, while making cheap-stock tunneling more difficult, cannot prevent it when asymmetric...Read more