This paper summarizes the empirical and theoretical research on executive compensation and provides a comprehensive and up-to-date description of pay practices (and trends in pay practices) for chief executive officers (CEOs). Topics discussed include the level and structure of CEO pay (including detailed analyses of annual bonus plans, executive stock options, and option valuation), international pay differences, the pay-setting process, the relation between CEO pay and firm performance (“pay-performance sensitivities”), the relation between sensitivities and subsequent firm performance, relative performance evaluation, executive turnover, and the politics of CEO pay.

NOTE: We will make final revisions to this paper in July 2000, at which time we will make reference to all pertinent papers that have come to our attention by June 30, 2000. If anyone reading this survey knows of a pertinent paper not presently included in the list of references, please send a copy or a reference to one of us. *Djankov is Financial Economist at the World Bank. Murrell is Professor of Economics and Chair of the Academic Council of the IRIS Center, University of Maryland. We would like to thank Judy Hellerstein, John McMillan, John Nellis, and Jan Svejnar for helpful advice and Wooyoung Kim and Tatiana Nenova for research assistance. This research was made possible through support provided by the World Bank and by the U.S. Agency for International Development under Cooperative Agreement No. DHR-0015-A-00-0031-00 to the Center for Institutional Reform and the Informal Sector (IRIS). The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the IRIS Center, US AID, the World Bank, its Executive Directors, or the countries they represent. Enterprise Restructuring in Transition: A Quantitative Survey Abstract. There are now over 125 empirical papers that analyze the process of enterprise restructuring in transition

We present a model of the effects of legal protection of minority shareholders and of cash-flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 539 large firms from 27 wealthy economies.

Agency Problems, Equity Ownership, and Corporate Diversification We provide evidence on the agency cost explanation for corporate diversification by documenting three principal findings. First, there is a strong negative relation between the extent of diversification and managerial equity ownership after controlling for other factors related to diversification. Second, there is a weak negative relation between the value loss from diversification and managerial ownership. Third, decreases in diversification are associated with external corporate control threats, financial distress, and management turnover. These findings are consistent with the hypotheses that agency problems are responsible for firms maintaining value-reducing diversification strategies and that the recent trend towards increased corporate focus is attributable to market disciplinary forces. 3 Agency Problems, Equity Ownership, and Corporate Diversification Several recent studies examine the valuation consequences ...

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This paper investigates whether management ownership structures and large non-management blockholders are related to firm value across a sample of 1433 firms from 18 emerging markets. When a management group’s control rights exceed its cash flow rights, I find that firm values are lower. I also find that large non-management control rights blockholdings are positively related to firm value. Both of these effects are significantly more pronounced in countries with low shareholder protection. One interpretation of these results is that external shareholder protection mechanisms play a role in restraining managerial agency costs and that large non-management blockholders can act as a partial substitute for missing institutional governance mechanisms.

We document that ownership by officers and directors of publicly-traded firms is on average higher today than earlier in the century. Managerial ownership rises from 13 percent for the universe of exchange-listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the

We use a sample of 800 firms in eight East Asian countries to study the effect of ownership structure on value during the region’s financial crisis. The crisis negatively impacted firms’ investment opportunities, raising the incentives of controlling shareholders to expropriate minority investors. During the crisis, cumulative stock returns of firms in which managers have high levels of control rights, but have separated their control and cash flow ownership, are 10 to 20 percentage points lower than those of other firms. The evidence is consistent with the view that ownership structure plays an important role in determining the incentives of insiders to expropriate minority shareholders. *Michael Lemmon and Karl Lins are Associate and Assistant Professors of Finance, respectively, at the

We examine the equity ownership structure and board composition of a sample of 583 "rms over the ten-year period 1983}1992. Our evidence suggests that a substantial fraction of "rms exhibit large changes in ownership and board structure in any given year. These changes are correlated with one another and are not reversed in subsequent years. Ownership and board changes are strongly related to top executive turnover, prior stock price performance, and corporate control threats, but only weakly related to changes in "rm-speci"c determinants of ownership and board structure. Furthermore, large ownership changes are typically preceded by economic shocks and followed by asset restructurings. � 1999 Elsevier Science S.A. All rights reserved.

orporate governance is generally considered to be the set of complementary mechanisms that help align the actions and choices of managers with the interests of shareholders. Monitoring actions by the board of directors, debtholders, or