Related Party Transactions: Policy Options and Real-World Challenges (with a Critique of the European Commission Proposal)

Ventoruzzo, Marco

doi:10.1007/s40804-015-0001-3

Cited by 37 publications

(16 citation statements)

References 52 publications

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“…Controlling shareholders may also provide stability and continuation of strategy, whilst concurrently creating agency conflicts of type II between controlling and non-controlling owners Vishny 1986, 1997;Faccio and Lang 2002;Cronqvist and Nilsson 2003;Barontini et al 2017;Courteau et al 2017). Such conflicts include direct expropriation of value from minorities, for example through related party transactions (Enriques 2015;Courteau et al 2017), or distorted decisions about firm size, investment decisions, or transfer of control (Claessens et al 2002;La Porta et al 2002;Cronqvist and Nilsson 2003;Masulis et al 2009). The concerns about non-optimal decisions are especially pertinent when controlling shareholders use dual-class shares 7 (Bebchuk et al 2000;Cronqvist and Nilsson 2003;Masulis et al 2009).…”

mentioning

confidence: 99%

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Cieslak

2018

J Manag Gov

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Based on a unique country set up with concentrated ownership of firms, strong representation of major shareholders on boards and one of the highest percentages of firms with dual-class shares worldwide I study CEO pay-performance sensitivity in Swedish listed firms in the years 2001-2013. Focusing on Type II agency conflict, I find that that pay-performance sensitivity in family-controlled firms with family CEOs is significantly lower than in other types of firms, and that dual-class firms have significantly lower sensitivity of pay to accounting performance than non-dual-class firms. The results suggest that in firms with type II agency conflicts compensation practices may be driven either by family ties or by the power preferences of the controlling shareholder that uses compensation to align CEO's interest with his/her will rather than with financial performance. The study also documents that the link between CEO pay and performance disappears in the 2010-2013 period following the implementation of the European Recommendations regarding executive compensation. This finding is in contrast to the stipulated goal of the European Commission, 'to ensure pay for performance' (European Commission 2009).

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mentioning

confidence: 99%

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Cieslak

2018

J Manag Gov

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“…81 In sum, financial reporting does not adequately constrain controlling shareholders. 82 IV. Inadequacy of Self-Dealing Mechanisms in Some Civil Law Jurisdictions 9.…”

Section: Transparencymentioning

confidence: 99%

Self-Dealing by Controlling Shareholders: Improving Minority Protection in Light of Article 9 c SRD

Hallemeesch

2018

European Company and Financial Law Review

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Controlling shareholders may cause a company to enter into transactions with themselves or one of their subsidiaries, thereby expropriating minority shareholders. General principles of company law, such as board autonomy, often do not adequately constrain controlling shareholders. Moreover, Belgian, French and Dutch courts apply deferential standards of review to related party transactions, while approval procedures in these jurisdictions are also flawed. A recent amendment to the Shareholder Rights Directive requires adequate protection of minority shareholders against self-dealing. Member States may subject related party transactions to a majority-of-minority vote, the approval of independent directors or judicial review. This paper discusses the efficiency of each of these mechanisms.

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“…70 All in all, where disclosure trumps accountability in the form of shareholder approval, the challenge of securing an adequate approval and enforcement regime for related party transactions continues to loom large. 71…”

Section: T H E D I R E C T I V E O N L O N G -T E R M S H a R E H O Lmentioning

confidence: 99%

The Mythical Value of Voice and Stewardship in the EU Directive on Long-term Shareholder Engagement: Rights Do Not an Engaged Shareholder Make

Ahern¹

2018

Camb. Yearb. Eur. Legal Stud.

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Through the lens of assessing the likely regulatory impact of the 2017 EU Directive on Long-term Shareholder Engagement and its amendments to the 2007 Directive on Shareholder Rights, this article considers the mythical voice and stewardship role attributed by the EU to shareholders as active corporate governance gatekeepers and drivers of its long-term sustainability agenda. It identifies limitations of the Directive itself and practical challenges concerning the provisions on shareholder identification, executive pay, related party transactions, proxy advisors and shareholder engagement policies. It is argued that there is a considerable normative gap between the EU narrative of engagement and the challenge of engaging shareholders away from self-interest and rational apathy to fulfil a stewardship role.

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Related Party Transactions: Policy Options and Real-World Challenges (with a Critique of the European Commission Proposal)

Cited by 37 publications

References 52 publications

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Self-Dealing by Controlling Shareholders: Improving Minority Protection in Light of Article 9 c SRD

The Mythical Value of Voice and Stewardship in the EU Directive on Long-term Shareholder Engagement: Rights Do Not an Engaged Shareholder Make

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