A theory of optimal expropriation, mergers and industry competition

Brisley, Neil; Bris, Arturo; Cabolis, Christos

doi:10.1016/j.jbankfin.2010.09.011

Cited by 13 publications

(4 citation statements)

References 46 publications

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“…Second, our paper contributes to the rapidly expanding literature on the corporate governance of SR firms. Brisley et al (2011) allow firms to incorporate stakeholders' objectives in the corporate value chain, besides the maximization of shareholders' value. In a homogeneous oligopoly, managers decide upon output levels by maximizing a utility function consisted by profits and an excess CSR-related cost.…”

Section: Related Literature and Contributionmentioning

confidence: 99%

“…We restrict our attention to the latter type, as owners care about their firms' involvement in socially responsible actions (i.e., a 'warm glow'), instead of donating to 'governments or other philanthropic intermediaries' . CSR activities of the latter type are described by Brisley et al (2011) as actions to reduce the societal and ecological footprint of firms, through the incorporation of their stakeholders' objectives in the corporate value chain. Such programs contain the improvement of employees' health and safety, the support of local suppliers, the reduction of emissions of pollutants, and the use of environmentally friendly inputs.…”

Section: Introductionmentioning

confidence: 99%

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Strategic Corporate Social Responsibility Activities and Corporate Governance in Imperfectly Competitive Markets

2013

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We investigate the incentives of firms' owners to commit voluntarily to corporate social responsibility (CSR) activities in an oligopolistic market. The socially responsible attributes attached to products are considered as credence goods, with consumers forming expectations about their existence and level. We show that hiring an ‘individually’ socially responsible CEO and delegating to him the CSR effort and market decisions acts as a commitment device for the firm's owners and credibly signals to consumers that the firm will undertake the ‘missioned’ CSR activities. We also find that CSR activities are welfare enhancing for consumers and firms and thus, they should be encouraged. Copyright © 2013 John Wiley & Sons, Ltd.

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Section: Related Literature and Contributionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Strategic Corporate Social Responsibility Activities and Corporate Governance in Imperfectly Competitive Markets

2013

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“…A number of papers acknowledge that a government's objective function may consider the welfare of constituencies other than shareholders so that shareholder wealth maximization may not be of overriding concern. Brisley et al (2011) find that expropriation by firm managers is possible because of corporate governance -slack‖ permitted by the government. This in turn induces managers to choose levels of output and costs that are higher than would otherwise be optimal, which in turn benefits consumers because the equilibrium price is lower.…”

Section: Testable Predictionsmentioning

confidence: 99%

Orders of Merit and CEO Compensation: Evidence from a Natural Experiment

Siming

2012

SSRN Journal

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Manuscript Type Empirical Research Question/Issue Governments worldwide bestow orders of merit upon their citizens as a recognition of distinguished service. In this paper, I study whether orders of merit can function as an external form of perquisite through which the government can supplement the compensation given by a publicly listed firm to the CEO. Research Findings/Insights I build upon the literature on perquisites to develop hypotheses on the relationship between orders of merit and executive compensation. The predictions are tested through an empirical analysis that revolves around the 1974 legal reform in which Sweden discontinued the conferral of orders of merit to citizens. The difference‐in‐differences methodology I employ enables me to make causal statements on the relationship between orders of merit, firm performance, and monetary compensation. I find that orders of merit function as symbols that visibly confirm social status vis‐à‐vis the general public and are valued by CEOs as a substitute for the need to engage in conspicuous consumption. Theoretical/Academic Implications This study provides empirical support that orders of merit can be seen as an external form of perquisite that can substitute for monetary compensation. Essentially, this is evidence that governments can affect CEO salaries through the provision of a non‐monetary status good. The findings also indicate that CEOs not only care about distinguishing themselves as “superstars” among their peer group of corporate leaders but also value non‐monetary symbols that emphasize their social status in relation to the general public. Practitioner/Policy Implications Companies should take into account that CEOs may receive valuable status goods from the government when determining compensation policies. In addition, governments should consider that the removal of non‐monetary awards may result in higher levels of monetary compensation in publicly listed firms.

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Section: Testable Predictionsmentioning

confidence: 99%