Executive compensation in Germany

Beck, Daniel; Friedl, Günther; Schäfer, Peter

doi:10.1007/s11573-020-00978-y

Cited by 19 publications

(44 citation statements)

References 84 publications

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“…Third, we follow the call by Beck et al (2020) for more research on executive compensation with international data, given the conclusion that their empirical results for German data at least partly diverge from results for U.S. data. By focusing on the German two-tier board system with clearly separated responsibilities, we can provide further insight into the mechanisms of the negotiation process of CEO compensation, which would be extremely challenging to investigate among one-tier systems.…”

Section: Introductionmentioning

confidence: 79%

The social-psychological perspective on executive compensation: evidence from a two-tier board system

et al. 2021

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This paper investigates whether and how social-psychological mechanisms, namely reciprocity, demographic similarity, and similar experiences, affect CEO compensation packages with respect to the levels of total, fixed, and short- and mid-term compensation and the variable proportion of the compensation package. We use evidence from Germany as it is considered a prototype of a two-tier board system. Given the primary roles of both the CEO and the chair of the supervisory board, we especially highlight social-psychological mechanisms in the process leading to the final compensation package. Using a hand-collected sample of non-financial constituents of the German HDAX, we find that reciprocity can lead to a compensation package that is more favorable for the CEO. Results on similarity are ambivalent such that the effects of similarity on CEO compensation—both positive and negative—may depend on the dimension of similarity. Finally, the chair’s CEO experience, both inside and outside the focal company, also plays an essential role in shaping CEO compensation. More specifically, CEO experience in general is associated with more favorable compensation. However, having a chair that has been CEO at the focal company correlates with less favorable compensation packages except for when the CEO has also been recruited internally.

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Section: Introductionmentioning

confidence: 79%

The social-psychological perspective on executive compensation: evidence from a two-tier board system

et al. 2021

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“…17 To calculate this measure, we hand-collect data for CEOs of TecDAX firms and use the executive compensation database from Beck, Friedl, and Schäfer (2020) for CEOs of DAX and MDAX firms. Earlier studies typically use vega (the sensitivity of a CEO's option holdings or total wealth to a change in stock price volatility) as a measure of CEO risk-taking incentives (e.g.…”

Section: << Insert Table 6 >>mentioning

confidence: 99%

“…The family firm dummy is an indicator variable set to one if a firm is a family firm according to Shleifer and Vishny (1986); otherwise, it is set to zero. Beck, Friedl, and Schäfer (2020) Age Age corresponds to the age of a firm's CEO (in years) during a given fiscal year. Beck, Friedl, and Schäfer (2020) Tenure Tenure corresponds to the length of time that a given firm's CEO has been with the firm (in years) for a given fiscal year.…”

Section: Capitaliq Family Firm Dummymentioning

confidence: 99%

“…Beck, Friedl, and Schäfer (2020) Age Age corresponds to the age of a firm's CEO (in years) during a given fiscal year. Beck, Friedl, and Schäfer (2020) Tenure Tenure corresponds to the length of time that a given firm's CEO has been with the firm (in years) for a given fiscal year.…”

Section: Capitaliq Family Firm Dummymentioning

confidence: 99%

“…Female is an indicator variable that is set to one if the CEO of a firm is a woman; otherwise, it is set to zero. Beck, Friedl, and Schäfer (2020) A3. The Value-Weighted Composition of German Firms' Financial Portfolios…”

Section: Femalementioning

confidence: 99%

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Do Nonfinancial Firms Hold Risky Financial Assets? Evidence from Germany

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Recent empirical evidence suggests that US industrial firms invest heavily in noncash, risky financial assets. Using hand-collected data on financial portfolios of German firms, we show that risky asset holdings are not an anomaly unique to the US. We find that industrial firms in Germany invest 11.6% of their financial assets in noncash and risky assets. Value-weighted, this percentage increases to 25.4%. While the equally-weighted average is substantial, it is clearly lower (5 percentage points or 30% in relative terms) than that in the US. After accounting for crosscountry compositional differences (especially the dominance of large firms in the US technology sector), this difference in risky financial asset holdings decreases but remains at 3 percentage points. The remaining difference is driven by institutional differences that affect the relationship between firm characteristics and risky financial asset holdings in the two countries. In contrast to the US, German firms largely follow the precautionary savings motive and do not seem to misappropriate their funds when shifting them towards riskier asset allocations. Our results have implications for how asset management by nonfinancial firms should be regulated.

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Betriebe und soziale Ungleichheit

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2024

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Executive compensation in Germany

Cited by 19 publications

References 84 publications

The social-psychological perspective on executive compensation: evidence from a two-tier board system

The social-psychological perspective on executive compensation: evidence from a two-tier board system

Do Nonfinancial Firms Hold Risky Financial Assets? Evidence from Germany

Betriebe und soziale Ungleichheit

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