Research Question/Issue: Despite the benefits of privatization (i.e., divestiture of government-owned enterprises), governments still own substantial stakes in economically important firms. Given public concern about excessive compensation and frequent government responses, this paper compares the level and structure of CEO compensation in privatized firms, including those still partially owned by governments, to firms never owned by the government.Research Findings/Insights: Using a multinational sample of firms, we find that privatized firms have lower total CEO compensation than private firms never owned by governments. CEO equity-linked wealth in privatized firms is less sensitive to stock performance, and equity compensation is negatively related to government ownership stakes. Privatized companies engage in less risk-taking than nonprivatized companies, suggesting that government risk aversion could explain differences in CEO compensation.Theoretical/Academic Implications: This study finds that the role government ownership plays in the level and structure of executive compensation is broadly consistent with pay regulations governments periodically impose. It provides empirical support for the argument that government owners are risk-averse and associated with lower equity-linked executive pay, which discourages CEO risk-taking.Practitioner/Policy Implications: This study encourages corporate boards to consider the degree of government involvement in their firms when setting CEO compensation packages and policies. Government concerns about excessive compensation may require boards to find other ways to incentivize CEOs, particularly given the weaker governance linked to state-influenced firms. Additionally, governments should analyze their influences on CEO compensation, and how these can affect performance, when considering their ownership stakes in public companies.
There has been a considerable increase in the use of Information and Communications Technology (ICT) across the globe since 1991. This article examines the dynamic relationship among financial development, ICT and Gross Domestic Product (GDP) per capita in a panel cointegration framework using 86 sample countries. The long-run relationships are identified using panel unit root tests, cointegration analysis and Dynamic Ordinary Least Squares (DOLS). The ICT indicators are proxied by the number of personal computers, Internet users and mobile phone subscribers. Our first finding is that personal computers and GDP per capita increase the liquidity, size and activity of financial systems. Second, the Internet and GDP per capita improve the liquidity, size, stock trading and activity of financial markets. Third, mobile phones and GDP per capita stimulate financial market liquidity, financial market size and credit expansion. The results provide a clear support for an equilibrium relation among financial development, ICT and GDP per capita.financial development, financial markets, ICT, economic growth, panel cointegration,
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