Multiple Large Shareholders And Owner-Manager Compensation: Evidence From French Listed Firms

Abstract

The objective of this study is to examine the relation between complex ownership structures and managerial compensation. More specifically, we examine the impact of the owner-manager’s excess control and the presence of multiple large shareholders (MLS) on the owner-manager’s compensation. Using a sample of French publicly listed firms, the results reveal several important points. First, the owner-manager’s compensation increases with the owner-manager’s excess control. This finding indicates that managers use their power to increase their pay, hence expropriating minority shareholders. Second, the presence of MLS decreases managerial opportunism and prevents owner-managers from diverting corporate resources for their own benefit. Hence, MLS play an important monitoring role.