Executive incentive schemes in initial public offerings: the effects of multiple-agency conflicts and corporate governance

Article Type: Abstracts From: Strategic Direction, Volume 26, Issue 11

Allcock D. and Filatotchev I.Journal of Management, May 2010, Volume 36 Issue 3, Start page 663, No. of pages: 24

Combining a behavioral agency perspective with research on multiple-agency conflicts, this article examines factors affecting the implementation of equity-based incentive schemes in initial public offerings (IPOs). With a unique sample of UK IPO companies between the years 1998 and 2002, it shows that conditional (performance-related) incentive schemes are negatively associated with share ownership and board power of the IPO’s founding directors. However, the retained ownership of venture capital firms is positively associated with the probability of conditional incentive schemes. Board independence weakly effects on the toughness of executive compensation. The article’s interesting findings suggest a number of avenues for a future analysis of the governance development process in threshold firms.Article type: Research paperISSN: 0149-2063Reference: 39AR472

Keywords: Agency theory, Corporate governance, Directors,Incentives