Corparate governance mechanisms in management research: Designs and strategic implications for M&AS, CEO contracting and shareholder voting

Publikation: Qualifikations-/Studienabschlussarbeit › Dissertation

Autoren

  • Cihan Demirtas

Organisationseinheiten

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Details

OriginalspracheEnglisch
QualifikationDoctor rerum politicarum
Gradverleihende Hochschule
Betreut von
  • Christiana Weber, Betreuer*in
Datum der Verleihung des Grades22 Juni 2022
ErscheinungsortHannover
PublikationsstatusVeröffentlicht - 2023

Abstract

Seit der zweiten Hälfte des 20. Jahrhunderts ist die Corporate Governance börsennotierter Unternehmen ein wesentlicher Bestandteil der Managementforschung und ein stetig diskutiertes Thema in der Betriebswirtschaftslehre (Aguilera, Desender, Bednar, & Lee, 2015; Aguilera & Jackson, 2010; Bebchuk & Weisbach, 2010; Dalton, Hitt, Certo, & Dalton, 2007; Davis, 2005; Filatotchev & Boyd, 2009; Rau et al., 2013; Tihanyi, Graffin, & George, 2014). Ein essentieller Teil der Debatte ist die Prinzipal-Agent-Theorie, die einen Interessenskonflikt aufgrund der Trennung von Eigentum und Kontrolle zwischen Management und Aktionären beschreibt (Jensen & Meckling, 1976, p. 302). Die einflussreichen Analysen von Mace (1971), Jensen und Meckling (1976), Shleifer und Vishny (1997) sowie Fama und Jensen (1983) zeigen Governance Mechanismen auf, die versuchen, PAT-Konflikte zu entschärfen. Diese Governance Mechanismen sind in den Vordergrund der theoretischen und empirischen Forschung gerückt, wie z. B. die vertragliche Gestaltung von Managementverträgen (Cowen, King, & Marcel, 2016) und Aktionärsvorschläge (Goranova & Ryan, 2014). Ziel dieser Dissertation ist es, zu untersuchen, wie Unternehmenseigentümer mit Hilfe neuartiger Governance Mechanismen wie Shareholder Proposals und Severance Agreements PAT-Konflikte lösen und damit den Unternehmenserfolg begünstigen können. Neben dem Einfluss der Anteilseigner auf die operative Führung von Unternehmen, werden in dieser Dissertation auch die vertraglichen Regelungen (Severance Agreements) der CEOs und deren Einfluss auf die persönlichen Präferenzen der Manager, wie z. B. deren Risikoaffinität, betrachtet. Der erste Beitrag untersucht, wie Unternehmenseigentümer ihren Einfluss in der Unternehmensführung durch Shareholder Proposals geltend machen. Bisherige Forschung hat in den vergangenen Dekaden besondere Aufmerksamkeit auf den Einfluss von Shareholder Proposals gelegt. Insbesondere die zugrundeliegenden Mechanismen der Shareholder Proposals, wie die Incentivierungsfunktion des Managements (Say on Pay), die Mitarbeitervergütung (Employee Stock Options) und deren Häufigkeit (Say on Frequency) sowie die Wechselwirkung mit der Wahl der Unternehmensprüfer, welche für Transparenz sorgt (Independent Auditors), wurden bislang nicht vollständig verstanden. Auf Basis der Principal-Agenten-Theorie werden im ersten Beitrag Hypothesen zum Zusammenspiel verschiedener Shareholder Proposals sowie deren Interaktion im Kontext von M&A Transaktionen entwickelt. Diese Hypothesen werden empirisch anhand eines Datensatzes aus 170 Unternehmen und 369 Shareholder Proposals getestet und bestätigt. Indem die Wechselwirkung zwischen Shareholder Proposals aufgezeigt werden, wird ein wesentlicher Beitrag zur Prinzipal-Agenten-Theorie geleistet. Der zweite Beitrag befasst sich mit der Frage, wie Kombinationen (Komplementäre und Substitute) von Shareholder Proposals auf die Eigenkapitalrendite wirken. Bislang gibt es in der Literatur keine einheitliche Auffassung über die Wechselwirkung von Shareholder Proposals. Sie werden als Empfehlung der Unternehmenseigentümer an die Unternehmensleitung (aufgrund ihres nicht bindenden Charakters) zur Beeinflussung der Unternehmensführung gesehen. Im Rahmen einer konfigurationalen Betrachtung mit einem Datensatz von 744 Shareholder Proposals in 124 Unternehmen werden im zweiten Beitrag die Einflüsse von Shareholder Proposals auf die Eigenkapitalrendite betrachtet. Im Ergebnis haben klassische Erfolgsfaktoren wie Interessensgleichheit (zwischen Shareholdern und Management) und Transparenz einen wesentlichen Einfluss auf die gemeinsam erzielbare Eigenkapitalrendite. Employee incentives weisen hingegen keinen Effekt auf die Eigenkapitalrendite auf. Mit diesen Ergebnissen stellt die Studie die Relevanz von Shareholder Proposals als governance tool dar. Der dritte Beitrag fokussiert sich auf Incentivierungsmaßnahmen, die Unternehmenseigentümer bei der Stärkung der Risikoneigung des Managements anwenden können bspw. Severance Agreements. Die bisherige Forschung hat erst vor kurzem besondere Aufmerksamkeit auf die Wirkung von Severance Agreements und deren Incentivierungsfunktion gelegt. Die zugrunde liegenden Mechanismen, wie das Triggering der Risikoneigung durch die Konfiguration von Absicherungsmaßnahmen des Humankapitals und auch der Einkommensperspektive von CEOs wurden noch nicht verstanden. Auf Basis eines theoretischen Frameworks von Cowen et al. (2016) und Grundzügen der Prinzipal-Agenten-Theorie werden im dritten Beitrag im Rahmen einer konfigurationalen Betrachtung mit einem Datensatz von 58 Ex-Ante Severance Agreements die Einflüsse der verschiedenen Dimensionen von Severance Agreements auf die Risikoaffinität betrachtet. Einzelne Elemente von Abfindungsvereinbarungen haben einen signifikanten Einfluss auf die Risikoaffinität von CEOs. Auch die Ausgestaltung von Abfindungspaketen, d. h. mehrere Abfindungselemente in Kombination, haben einen Einfluss auf die Risikoaffinität von CEOs. Damit stellt die Studie die Relevanz von Severance Agreements dar und legt nahe, die Bewertung der verschiedenen Severance Agreements Elemente in Konfigurationen vorzunehmen.

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Corparate governance mechanisms in management research: Designs and strategic implications for M&AS, CEO contracting and shareholder voting. / Demirtas, Cihan.
Hannover, 2023. 166 S.

Publikation: Qualifikations-/Studienabschlussarbeit › Dissertation

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title = "Corparate governance mechanisms in management research: Designs and strategic implications for M&AS, CEO contracting and shareholder voting",
abstract = "Since the second half of the 20th century, corporate governance of publicly traded companies has been an integral part of management research and a constantly debated topic in management science (Aguilera et al., 2015; Aguilera & Jackson, 2010; Bebchuk & Weisbach, 2010; Dalton et al., 2007; Davis, 2005; Filatotchev & Boyd, 2009; Rau et al., 2013; Tihanyi et al., 2014). A central component of the debate is principal-agent theory, which describes a conflict of interest due to “the separation of ownership and control” between management and shareholders (Jensen & Meckling, 1976, p. 302). The influential analyses of Mace (1971), Jensen & Meckling (1976), Shleifer and Vishny (1997), and Fama & Jensen (1983) identify governance mechanisms that attempt to mitigate principal-agent conflicts. These governance mechanisms have come to the forefront of theoretical and empirical research, such as the contractual design of management contracts (Cowen, King, & Marcel, 2016) and shareholder proposals (Goranova & Ryan, 2014). The purpose of this dissertation is to examine how shareholders can use novel governance mechanisms, such as shareholder proposals and severance agreements, to resolve principal-agent conflicts and thereby promote corporate success. In addition to the influence of shareholders on operational governance, this dissertation also examines CEOs' contractual arrangements (severance agreements) and their influence on managers' personal preferences, such as their affinity for risk. The first paper examines how corporate owners exert their influence on corporate governance through shareholder proposals. Previous research has paid particular attention to the influence of shareholder proposals in recent decades. In particular, the mechanisms underlying shareholder proposals, such as the incentive function of management (Say on Pay), employee compensation (Employee Stock Options) and their frequency (Say on Frequency), as well as the interactions with the choice of auditor providing transparency (Independent Auditors), are not yet fully understood. Based on the principal-agent theory, hypotheses were developed about the interaction of different shareholder proposals as well as their interaction in the context of Mergers & Acquisitions (M&A) transactions. These hypotheses were empirically tested and confirmed using a dataset of 170 companies and 369 shareholder proposals. By showing the interaction between shareholder proposals, a significant contribution to principal-agent theory is made. The second paper deals with the question of how combinations (complementary and substitutive) of shareholder proposals affect the return on equity. To date, there is no uniform view in the literature on the interaction of shareholder proposals. Shareholder proposals are seen as a recommendation by the company owners to the company management (due to their non-binding character) to influence the management of the company. In a configuration analysis with a data set of 744 shareholder proposals in 124 companies, the influence of shareholder proposals on return on equity is investigated. In this context, classic success factors such as alignment of interests and transparency have a significant influence on the jointly achievable return on equity, while employee incentives have no impact on return on equity. Therefore, the study presents the relevance of shareholder proposals as a governance tool and recommends an evaluation of the design of the various shareholder proposals for the different stakeholders. The third paper focuses on incentive measures that company owners can use to strengthen management's willingness to take risks, e. g. severance agreements. Previous research has only recently paid special attention to the effect of severance agreements and their incentive function. In particular, the underlying mechanisms, such as the triggering of risk-taking through the design of human capital protection and the CEO's income perspective, are not yet understood. Based on a theoretical framework by Cowen et al. (2016) and basic tenets of PAT, I examine the influences of various dimensions of severance agreements on risk affinity within a configuration framework using a dataset of 58 ex ante severance agreements. Individual elements of severance agreements have a significant influence on CEOs' risk affinity. The design of severance packages, i. e. several severance elements in combination, also has an influence on CEOs' risk affinity. The study thus underscores the importance of severance agreements and encourages an evaluation of the configurations of the various severance elements.",
author = "Cihan Demirtas",
note = "Doctoral thesis",
year = "2023",
doi = "10.15488/13235",
language = "English",
school = "Leibniz University Hannover",

}

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TY - BOOK

T1 - Corparate governance mechanisms in management research

T2 - Designs and strategic implications for M&AS, CEO contracting and shareholder voting

AU - Demirtas, Cihan

N1 - Doctoral thesis

PY - 2023

Y1 - 2023

N2 - Since the second half of the 20th century, corporate governance of publicly traded companies has been an integral part of management research and a constantly debated topic in management science (Aguilera et al., 2015; Aguilera & Jackson, 2010; Bebchuk & Weisbach, 2010; Dalton et al., 2007; Davis, 2005; Filatotchev & Boyd, 2009; Rau et al., 2013; Tihanyi et al., 2014). A central component of the debate is principal-agent theory, which describes a conflict of interest due to “the separation of ownership and control” between management and shareholders (Jensen & Meckling, 1976, p. 302). The influential analyses of Mace (1971), Jensen & Meckling (1976), Shleifer and Vishny (1997), and Fama & Jensen (1983) identify governance mechanisms that attempt to mitigate principal-agent conflicts. These governance mechanisms have come to the forefront of theoretical and empirical research, such as the contractual design of management contracts (Cowen, King, & Marcel, 2016) and shareholder proposals (Goranova & Ryan, 2014). The purpose of this dissertation is to examine how shareholders can use novel governance mechanisms, such as shareholder proposals and severance agreements, to resolve principal-agent conflicts and thereby promote corporate success. In addition to the influence of shareholders on operational governance, this dissertation also examines CEOs' contractual arrangements (severance agreements) and their influence on managers' personal preferences, such as their affinity for risk. The first paper examines how corporate owners exert their influence on corporate governance through shareholder proposals. Previous research has paid particular attention to the influence of shareholder proposals in recent decades. In particular, the mechanisms underlying shareholder proposals, such as the incentive function of management (Say on Pay), employee compensation (Employee Stock Options) and their frequency (Say on Frequency), as well as the interactions with the choice of auditor providing transparency (Independent Auditors), are not yet fully understood. Based on the principal-agent theory, hypotheses were developed about the interaction of different shareholder proposals as well as their interaction in the context of Mergers & Acquisitions (M&A) transactions. These hypotheses were empirically tested and confirmed using a dataset of 170 companies and 369 shareholder proposals. By showing the interaction between shareholder proposals, a significant contribution to principal-agent theory is made. The second paper deals with the question of how combinations (complementary and substitutive) of shareholder proposals affect the return on equity. To date, there is no uniform view in the literature on the interaction of shareholder proposals. Shareholder proposals are seen as a recommendation by the company owners to the company management (due to their non-binding character) to influence the management of the company. In a configuration analysis with a data set of 744 shareholder proposals in 124 companies, the influence of shareholder proposals on return on equity is investigated. In this context, classic success factors such as alignment of interests and transparency have a significant influence on the jointly achievable return on equity, while employee incentives have no impact on return on equity. Therefore, the study presents the relevance of shareholder proposals as a governance tool and recommends an evaluation of the design of the various shareholder proposals for the different stakeholders. The third paper focuses on incentive measures that company owners can use to strengthen management's willingness to take risks, e. g. severance agreements. Previous research has only recently paid special attention to the effect of severance agreements and their incentive function. In particular, the underlying mechanisms, such as the triggering of risk-taking through the design of human capital protection and the CEO's income perspective, are not yet understood. Based on a theoretical framework by Cowen et al. (2016) and basic tenets of PAT, I examine the influences of various dimensions of severance agreements on risk affinity within a configuration framework using a dataset of 58 ex ante severance agreements. Individual elements of severance agreements have a significant influence on CEOs' risk affinity. The design of severance packages, i. e. several severance elements in combination, also has an influence on CEOs' risk affinity. The study thus underscores the importance of severance agreements and encourages an evaluation of the configurations of the various severance elements.

AB - Since the second half of the 20th century, corporate governance of publicly traded companies has been an integral part of management research and a constantly debated topic in management science (Aguilera et al., 2015; Aguilera & Jackson, 2010; Bebchuk & Weisbach, 2010; Dalton et al., 2007; Davis, 2005; Filatotchev & Boyd, 2009; Rau et al., 2013; Tihanyi et al., 2014). A central component of the debate is principal-agent theory, which describes a conflict of interest due to “the separation of ownership and control” between management and shareholders (Jensen & Meckling, 1976, p. 302). The influential analyses of Mace (1971), Jensen & Meckling (1976), Shleifer and Vishny (1997), and Fama & Jensen (1983) identify governance mechanisms that attempt to mitigate principal-agent conflicts. These governance mechanisms have come to the forefront of theoretical and empirical research, such as the contractual design of management contracts (Cowen, King, & Marcel, 2016) and shareholder proposals (Goranova & Ryan, 2014). The purpose of this dissertation is to examine how shareholders can use novel governance mechanisms, such as shareholder proposals and severance agreements, to resolve principal-agent conflicts and thereby promote corporate success. In addition to the influence of shareholders on operational governance, this dissertation also examines CEOs' contractual arrangements (severance agreements) and their influence on managers' personal preferences, such as their affinity for risk. The first paper examines how corporate owners exert their influence on corporate governance through shareholder proposals. Previous research has paid particular attention to the influence of shareholder proposals in recent decades. In particular, the mechanisms underlying shareholder proposals, such as the incentive function of management (Say on Pay), employee compensation (Employee Stock Options) and their frequency (Say on Frequency), as well as the interactions with the choice of auditor providing transparency (Independent Auditors), are not yet fully understood. Based on the principal-agent theory, hypotheses were developed about the interaction of different shareholder proposals as well as their interaction in the context of Mergers & Acquisitions (M&A) transactions. These hypotheses were empirically tested and confirmed using a dataset of 170 companies and 369 shareholder proposals. By showing the interaction between shareholder proposals, a significant contribution to principal-agent theory is made. The second paper deals with the question of how combinations (complementary and substitutive) of shareholder proposals affect the return on equity. To date, there is no uniform view in the literature on the interaction of shareholder proposals. Shareholder proposals are seen as a recommendation by the company owners to the company management (due to their non-binding character) to influence the management of the company. In a configuration analysis with a data set of 744 shareholder proposals in 124 companies, the influence of shareholder proposals on return on equity is investigated. In this context, classic success factors such as alignment of interests and transparency have a significant influence on the jointly achievable return on equity, while employee incentives have no impact on return on equity. Therefore, the study presents the relevance of shareholder proposals as a governance tool and recommends an evaluation of the design of the various shareholder proposals for the different stakeholders. The third paper focuses on incentive measures that company owners can use to strengthen management's willingness to take risks, e. g. severance agreements. Previous research has only recently paid special attention to the effect of severance agreements and their incentive function. In particular, the underlying mechanisms, such as the triggering of risk-taking through the design of human capital protection and the CEO's income perspective, are not yet understood. Based on a theoretical framework by Cowen et al. (2016) and basic tenets of PAT, I examine the influences of various dimensions of severance agreements on risk affinity within a configuration framework using a dataset of 58 ex ante severance agreements. Individual elements of severance agreements have a significant influence on CEOs' risk affinity. The design of severance packages, i. e. several severance elements in combination, also has an influence on CEOs' risk affinity. The study thus underscores the importance of severance agreements and encourages an evaluation of the configurations of the various severance elements.

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