Résumés
Abstract
The goal of this paper is to study the effect of board employee representation on the CEO compensation in French publicly listed companies. The study shows the following results: First, we found that employee board representation affects negatively and significantly the CEO total compensation. Second, employee representation has no effect on firm financial performance. Third, we found that French State strengthens the control of BLER over CEOs and their compensation, rather than simply mediate it.
Keywords:
- CEO compensation,
- employee board representation,
- ownership structure,
- board of directors,
- corporate governance
Résumé
L’objectif de cet article est d’étudier l’impact de la représentation des salariés au conseil d’administration sur la rémunération des dirigeants des entreprises françaises cotées. L’étude conduit aux résultats suivants : En premier lieu, la représentation des salariés influence négativement la rémunération totale des dirigeants. Ensuite, la représentation des salariés n’a pas d’effet sur la performance financière de l’entreprise. Enfin, plutôt qu’une simple médiation, nous trouvons que l’Etat renforce le contrôle des représentants des salariés sur les dirigeants et leur rémunération.
Mots-clés :
- Rémunération des dirigeants,
- représentation des salariés,
- structure du capital,
- conseil d’administration,
- gouvernement d’entreprise
Resumen
El objetivo de esta investigación es estudiar el efecto de la representación de los empleados en el consejo de administración sobre la compensación del CEO en las empresas francesas que cotizan en bolsa. Encontramos los siguientes resultados: Primero, la representación de los empleados en el directorio afecta de manera negativa y significativa la compensación total del CEO. Además, la representación de los empleados no tiene ningún efecto sobre el desempeño financiero de la empresa. Finalmente, el Estado francés no sólo media, sino que refuerza el control de BLER sobre los directores ejecutivos y su compensación.
Palabras clave:
- Compensación de directores,
- representación de los empleados,
- distribución de capital,
- Junta Directiva,
- gobierno corporativo
Parties annexes
Bibliography
- Adhikari, Hari P.; Bulmash, Samuel B.; Krolikowski, Marcin W.; Sah, Nilesh B (2015). “Dynamics of CEO Compensation: Old is Gold”, The Quarterly Review of Economics and Finance, Vol. 57, p. 191-206.
- Ahlquist, John S. (2017). “Labor Unions, Political Representation, and Economic Inequality”, Annual Review of Political Science, Vol. 20, p. 409-432.
- Allen, Franklin; Carletti, Elena; Marquez, Robert (2009). “Stakeholder Capitalism, Corporate Governance and Firm Value” Wharton Financial Institutions Center, Working Paper, 09-28.
- Allgood, Sam; Farrell, Kathleen A (2000). “The Effect of CEO Tenure on the Relation between Firm Performance and Turnover”, Journal of Financial Research, Vol. 23, N° 3, p. 373-390.
- Al-Najjar, Basil (2017). “Corporate Governance and CEO Pay: Evidence from UK Travel a nd Leisure Listed Firms”, Tourism Management, Vol. 60, p. 9-14.
- Andolfatto, Dominique; Labbé, Dominique (2016). «France : La cartellisation des relations professionnelles», dans Andolfatto Dominique & Contrepois Sylvie (dir.). Syndicats et dialogue social. Les modèles occidentaux à l’épreuve, Bruxelles : Peter Lang, 2016, p. 139-160.
- Ángel, Pedro Ortín; Fumas, Vicente Salas (1997). “The compensation of Spanish executives: A test of a managerial talent allocation model”, International Journal of Industrial Organization, Vol. 15, N° 4, p. 511-531.
- Arellano, Manuel; Bond, Stephen (1991). “Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations”, The Review of Economic Studies, Vol. 58, N° 2, p. 277-297.
- Ayuso, Silvia; Argandona, Antonio (2007). “Responsible Corporate Governance: Towards a Stakeholder Board of Directors?” (No. D/701). IESE Business School.
- Balkin, David B.; Gomez-Mejia, Luis R. (1990). “Matching Compensation and Organizational Strategies”, Strategic Management Journal, Vol. 11, N° 2, p. 153-169.
- Balsmeier, Benjamin; Bermig, Andreas; Dilger, Alexander; Geyer, Hannah (2011). “Corporate governance and employee power in the boardroom: An applied game theoretic analysis”, Journal of Economic Behavior & Organization, Vol. 91, p. 51-74
- Barkema, Harry G.; Gomez-Mejia, Luis R. (1998). “Managerial Compensation and Firm Performance: A General Research Framework”, Academy of Management Journal, Vol. 41, N° 2, p. 135-145.
- Barney, Jay (1991). “Firm resources and sustained competitive advantage”, Journal of Management, vol. 17, N° 1, p. 99-120.
- Baron, James N.; Kreps, David M. (1999). “Consistent human resource practices”, California Management Review, Vol. 41, N° 3, p. 29-53.
- Baron, Reuben M.; Kenny, David A. (1986). “The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations”, Journal of Personality and Social Psychology, Vol. 51, N° 6, p. 11-73.
- Baums, Theodor; Frick, Bernd (1998). “Codetermination in Germany: The Impact of Court Decisions on the Market Value of the Firm”, Economic Analysis, Vol. 1, N° 2, p. 143-161.
- Bear, Stephen; Noushi, Rahman; Post, Corinne (2010). “The impact of board diversity and gender composition on corporate social responsibility and firm reputation”, Journal of Business Ethics Vol. 97, N° 2, p. 207-221.
- Benabou, Roland; Tirole, Jean (2003). “Intrinsic and extrinsic motivation.”, The review of economic studies, Vol. 70, N° 3, p. 489-520.
- Benson, Bradley W.; Davidson, Wallace N. (2010). “The Relation between Stakeholder Management, Firm Value, and CEO Compensation: A test of Enlightened Value Maximization”, Financial Management, Vol. 39, N° 3, p. 929-964.
- Berglund, Tom; Holmen, Martin (2017). “Employees on Corporate Boards”, Multinational Finance Journal, Vol. 20, N° 3, p. 237–271.
- Bhagat, Sanjai; Black, Bernard (2000). “Board independence and long-term firm performance”, unpublished paper, University of Colorado.
- Bhagat, Sanjai; Romano, Roberta (2009). “Reforming Executive Compensation: Focusing and Committing to the Long-Term”, Yale Journal on Regulation, Vol. 26, p. 359-372.
- Boyd, Brian K. (1994). “Board Control and CEO Compensation”, Strategic Management Journal, Vol. 15 N° 5, p. 335-344.
- Brockman, Paul; Lee, Hye Seung Grace; Salas, Jesus M. (2016). “Determinants of CEO compensation: Generalist–specialist versus insider–outsider attributes”, Journal of Corporate Finance, Vol. 39, p. 53-77.
- Broye, G., Giacomo A.D. et Prinz E. (2018). “Pratiques de divulgation des éléments de rémunération des dirigeants et incidence de l’actionnariat familial”, Finance Contrôle Stratégie, Vol. 21, N° 4, p. 31-59.
- Brunello, Giorgio; Graziano, Clara; Parigi, Bruno (2001). “Executive Compensation and Firm Performance in Italy”, International Journal of Industrial Organization, Vol. 19, N° 1-2, p. 133-161.
- Carpenter, Mason A.; Sanders, WM Gerard (2002). “Top Management Team Compensation: The Missing Link between CEO Pay and Firm Performance?”, Strategic Management Journal, Vol. 23, N° 4, p. 367-375.
- Cavaco, Sandra; Crifo, Patricia; Rebérioux, Antoine; Roudaut, Gwenael (2017). “Independent directors: Less informed but better selected than affiliated board members?”, Journal of Corporate Finance, Vol. 43, p. 106-121.
- Chen, Chia-Wei; Yi, Bingsheng; Lin, J. Barry (2013). “Media Coverage, Board Structure and CEO Compensation: Evidence from Taiwan”, Journal of Multinational Financial Management, Vol. 23, N° 5, p. 434-445.
- Coles, Jeffrey L.; Daniel, Naveen D.; Naveen, Lalitha (2008). “Boards: Does one size fit all?”, Journal of Financial Economics, Vol. 87, N° 2, p. 329-356.
- Conchon, Aline (2011). Board-Level Employee Representation Rights in Europe: Facts and Trends, Brussels: ETUI, European Trade Union Institute.
- Core, John E.; Holthausen, Robert W.; Larcker, David F. (1999). “Corporate Governance, Chief Executive Officer Compensation, and Firm Performance”, Journal of Financial Economics, Vol. 51, N° 3, p. 371-406.
- Cronqvist, Henrik; Heyman, Fredrik; Nilsson, Mattias; Svaleryd, Helena; Vlachos, Jonas (2009). “Do entrenched managers pay their workers more?”, The Journal of Finance, Vol. 64, N° 1, p. 309-339.
- Dardour, Ali; Ben Farhat Toumi, Nadia; Boussaada Rim (2018). “Composition du conseil d’administration et divulgation d’informations RSE», Finance Contrôle Stratégie, Vol. 22, p. 61-92.
- Dardour, Ali; Boussaada, Rim (2017). “CEO Compensation and State Ownership in French Listed Companies”, Management International, Vol. 21, N° 2, p 135-151.
- Dardour, Ali; Husser, Jocelyn; Hollandts, Xavier (2015). “CEO Compensation and Board Diversity: Evidence from French Listed Companies”, Revue de Gestion des Ressources Humaines, Vol. 4, N° 98, p. 30-44.
- Fauver, Larry; Fuerst, Michael E. (2006). “Does good corporate governance include employee representation? Evidence from German corporate boards”, Journal of Financial Economics, Vol. 82, N° 3, p. 673-710.
- Finkelstein, Sydney; Hambrick, Donald (1996). “Strategic Leadership”, St. Paul : West Educational Publishing.
- Freeman, Richard B.; Lazear, Edward P. (1995). “An Economic Analysis of Works Councils”, dans : J. Rogers, W. Streeck (Hrsg.), Works Councils-Consultation, Representation and Cooperation in Industrial Relations, p. 27-52.
- Freeman, R. Edward (2004). “The Stakeholder Approach Revisited”, Zeitschrift für Wirtschafts-und Unternehmensethik, Vol. 5, N° 3, p. 228-241.
- Friedman, Andrew L.; Miles, Samantha (2006). Stakeholders: Theory and Practice, Oxford, Oxford University Press, 360 p.
- Galbraith, Jay R.; Kazanjian, Robert K. (1986). “Organizing to Implement Strategies of Diversity and Globalization: The Role of Matrix Designs”, Human Resource Management, Vol. 25, N° 1, p. 37-54.
- Germain, Laurent; Lyon-Caen, Clément (2016). “Do We Need Employee Representation on the Board of Directors?”, SSRN Electronic Journal, 10.2139/ssrn.2729708.
- Ginglinger, Edith; Megginson, William; Waxin, Timothée (2011). “Employee ownership, Board Representation, and Corporate Financial Policies”, Journal of Corporate Finance, Vol. 17, N° 4, p. 868-887.
- Gomez, Rafael; Tzioumis, Konstantinos (2006). What do unions do to executive compensation? CEP Discussion Paper No 720, Centre for Economic Performance, London School of Economics and Political Science.
- Gomez-Mejia, Luis R. (1992). “Structure and Process of Diversification, Compensation Strategy, and Firm Performance”, Strategic Management Journal, Vol. 13, N° 5, p. 381-397.
- Gordon, Jeffrey N.; Roe, Mark J. (2004), Introduction. In Gordon, J. N. and Roe, M. J. (eds) Convergence and Persistence in Corporate Governance, 1-30. Cambridge: Cambridge University Press.
- Gregoric, Aleksandra; Poulsen Thomas (2019). “When Do Employees Choose to Be Represented on the Board of Directors? Empirical Analysis of Board-Level Employee Representation in Denmark”, British Journal of Industrial Relations, Vol. 58, N° 2, p. 1-32.
- Harrison, Jeffrey S.; Freeman, R. Edward; Abreu, Mônica Cavalcanti Sá de (2015). “Stakeholder Theory as an Ethical Approach to Effective Management: Applying the Theory to Multiple Contexts”, Revista Brasileira de Gestão de Negócios, Vol. 17, N° 55, p. 858-869.
- Hayes, Andrew F.; Matthes, Jörg (2009). “Computational procedures for probing interactions in OLS and logistic regression: SPSS and SAS implementations”, Behavior Research Methods, Vol. 41, N° 3, p. 924-936.
- Huang, Qianqian; Jiang, Feng; Lie, Erik; Que, Tingting (2017). “The Effect of Trade Unions on CEO Compensation”, Journal of Financial and Quantitative Analysis, Vol. 52, N° 2, p. 553-582.
- Huse, Morten; Nielsen, Sabina Tacheva; Hagen, Inger Marie (2009). “Women and Employee-Elected Board Members, and Their Contributions to Board Control Tasks”, Journal of Business Ethics, Vol. 89, N° 4, p. 581-597.
- Irani, Mahroo; Safari Gerayeli, Mehdi; Valiyan, Hasan (2017). “Board of Director Characteristics and CEO Compensation: Empirical Evidence from Iran”, Australasian Accounting, Business and Finance Journal, Vol. 11, N° 2, p. 105-117.
- Ishtiaq, Muhammad; Latif, Khalid; Khan, Arslan Najeeb; Noreen, Rafia (2017). “Corporate Social Responsibility and Firm Performance: The Moderating Effect of Ownership Concentration”, Journal of Managerial Sciences, Vol. 11, N° 3, p. 354-386.
- Jaccard, James; Wan, Choi K.; Turrisi, Robert (1990). “The detection and interpretation of interaction effects between continuous variables in multiple regression”. Multivariate Behavioral Research, Vol. 25, N° 4, p. 467-478.
- Jensen, Michael C. (1993). “The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems”, The Journal of Finance, Vol. 48, N° 3, p. 831-880.
- Jensen, Michael C.; Meckling, William H. (1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure”, Journal of Financial Economics, Vol. 3, N° 4, p. 305-360.
- Jensen, Michael C.; Murphy, Kevin J. (1990). “Performance Pay and Top-Management Incentives”, Journal of Political Economy, Vol. 98, N° 2, p. 225-264.
- Jones, Derek C.; Mygind, Niels; Sen, Patrick (2019). “Employee involvement, financial participation and firm performance”, Journal of Participation and Employee Ownership, Vol. 2, N° 2, p. 115-132.
- Kang, Jun-Koo; Shivdasani, Anil (1995). “Firm Performance, Corporate Governance, and Top Executive Turnover in Japan”, Journal of Financial Economics, Vol. 38, N° 1, p. 29-58.
- Kaplan, Steven N. (1994). “Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States”, Journal of Political Economy, Vol. 102, N° 3, p. 510-546.
- Kato, Takao (1997). “Chief Executive Compensation and Corporate Groups in Japan: New Evidence from Micro Data”, International Journal of Industrial Organization, Vol. 15, p. 455-468
- Kerr, Jeffrey L. (1985). “Diversification Strategies and Managerial Rewards: An Empirical Study”, Academy of Management Journal, Vol. 28, N° 1, p. 155-179.
- Kim, Kyoung Yong; Patel, Pankaj C. (2017). “Employee Ownership and Firm Performance: A Variance Decomposition Analysis of European Firms”. Journal of Business Research, Vol. 70, p. 248-254.
- Kochan, Thomas A. (2003). “Restoring trust in American corporations: Addressing the root cause.”, Journal of Management and Governance, Vol. 7, N° 3, p. 223-231.
- Kogan, Nathan; Shelton, Florence C. (1960). “Differential cue value of age and occupation in impression formation”. Psychological Reports, Vol. 7, N° 2, p. 203-216.
- Kroll, Mark; Wright, Peter; Toombs, Leslie; Leavell, HADLEY (1997). “Form of Control: A Critical Determinant of Acquisition Performance and CEO Rewards”, Strategic Management Journal, Vol. 18, N° 2, p. 85-96.
- Kruse, Douglas; Blasi, Joseph (1995). Employee Ownership, Employee Attitudes, and Firm Performance, (No. w5277), National Bureau of Economic Research.
- Kutner, Michael H.; Nachtsheim, Christopher J.; Neter, John; Li William (2005). Applied Linear Statistical Models, Boston: McGraw-Hill Irwin, 5th ed., 1396 p.
- Levinson, Klas. (2001), “Anställdas representation i foretaksstyrelser.” Arbeidsmarknad & Arbeidsliv 2.
- Lin, Chen; Schmid, Thomas; Xuan, Yuhai (2018). “Employee representation and financial leverage”, Journal of Financial Economics, Vol. 127, N° 2, p. 303-324.
- Liu, Yu; Miletkov, Mihail K.; Wei, Zuobao; Yang, Tina (2015). “Board independence and firm performance in China”, Journal of Corporate Finance, Vol. 30, p. 223-244.
- Mard, Yves; Marsat, Sylvain (2012). “Gestion des résultats comptables et structure de l’actionnariat : le cas français », Comptabilité-Contrôle-Audit, Vol. 18, N° 3, p. 11-42.
- Mard, Yves; Marsat, Sylvain; Roux, Fabien (2014). «Structure de l’actionnariat et performance financière de l’entreprise : le cas français», Finance Contrôle Stratégie, Vol. 17, N° 4.
- Markham, Jerry W. (2007). “Regulating Excessive Executive Compensation-Why Bother.”, Journal of Business & Technology Law, Vol. 2, p. 277.
- Martes, Reggie J. F. (2012). Employee Ownership and Firm Performance: The Performance of Employee-Owned Firms in Europe, Doctoral Dissertation, Master’s Thesis, Tilburg University, Tilburg.
- Martínez-Ferrero, Jennifer; Frías-Aceituno, José Valeriano (2015). “Relationship between sustainable development and financial performance: international empirical research”, Business Strategy and the Environment, Vol. 24, N° 1, p. 20-39.
- Mehran, Hamid (1995). “Executive Compensation Structure, Ownership, and Firm Performance”, Journal of Financial Economics, Vol. 38, N° 2, p. 163-184.
- Nichols, Donald; Subramaniam, Chandra (2001). “Executive compensation: Excessive or equitable?”, Journal of Business Ethics, Vol. 29, N° 4, p. 339-351.
- Nikolić, Jelena; Babić, Verica (2016). “The implications of ownership concentration for shareholder protection and strategic decision-making”, Ekonomski Anali/Economic Annals, Vol. 61, N° 211, p. 69-98.
- Ntim, Collins G.; Lindop, Sarah; Osei, Kofi A.; Thomas, Dennis A. (2015). “Executive Compensation, Corporate Governance and Corporate Performance: a Simultaneous Equation Approach”, Managerial and Decision Economics, Vol. 36, N° 2, p. 67-96.
- O’Boyle, Ernest H.; Patel, Pankaj C.; Gonzalez-Mulé, Erik (2016). “Employee Ownership and Firm Performance: A Meta-Analysis”, Human Resource Management Journal, Vol. 26, N° 4, p. 425-448.
- Ozkan, Neslihan (2007). “Do Corporate Governance Mechanisms Influence CEO Compensation? An Empirical Investigation of UK Companies”, Journal of Multinational Financial Management, Vol. 17, N° 5, p. 349-364.
- Pan, Yang; Huang, Peng; Gopal, Anandasivam (2018). “New Entry Threats and Information Disclosure: Evidence from the US IT Industry”, Academy of Management Global Proceedings, Vol. Surrey, N° 2018.
- Pombo, Carlos; Gutiérrez, Luis H. (2011). “Outside directors, board interlocks and firm performance: Empirical evidence from Colombian business groups”, Journal of Economics and Business, Vol. 63, N° 4, p. 251-277.
- Poulain-Rehm, Thierry (2000). Contribution à la connaissance de la politique de stock-options des entreprises françaises cotées : approche quantitative et qualitative, Doctoral dissertation, University of Bordeaux.
- Ruback, Richard S.; Zimmerman, Martin B. (1984). “Unionization and profitability: Evidence from the capital market”, Journal of Political Economy, Vol. 92, N° 6, p. 1134-1157.
- Sahut, Jean-Michel; Gharbi, Hidaya O. (2010). “Institutional Investors’ Typology and Firm Performance: The Case of French Firms”. International Journal of Business, Vol. 15, N° 1, p. 33.
- Sobel, Michael E. (1982). “Asymptotic confidence intervals for indirect effects in structural equation models”, Sociological Methodology, Vol. 13, p. 290-312.
- Taylor, Philip; Walker, Alan (1998). “Employers and older workers: Attitudes and employment practices”, Aging and Society, Vol. 18, N° 6, p. 641–658.
- Thomsen, Steen; Rose, Caspar; Kronborg, Dorte (2015). “Employee representation and board size in the Nordic countries”, European Journal of Law and Economics, Vol. 42, N° 3, p. 471-490.
- Toe, Siessima Djibril; Hollandts, Xavier; Valiorgue, Bertrand (2017). “The Dark Side of Employee Ownership in French Listed Companies, an Enquiry on the SBF 120 between 2000 and 2014”. Finance Contrôle Stratégie, Vol. 20, N° 1, p. 37-54.
- Tosi, Henry L.; Gomez-Mejia, Luis R.; Loughry, Misty L.; Werner, Steve; Banning, Kevin; Katz, Jeffrey; Harris, Randall; Silva, Paula (1999). “Managerial Discretion, Compensation Strategy, and Firm Performance: The Case for the Ownership Structure”, dans G. Ferris (Ed.), Research on Personnel and Human Resource Management, Greenwich, GT: JAI Press, p. 3-45.
- Wagner, Joachim (2011) “One-Third Codetermination at Company Supervisory Boards and Firm Performance in German Manufacturing Industries: First Direct Evidence from a New Type of Enterprise Data”, Schmollers Jahrbuch, Vol. 131, N° 1, p. 91-106
- Wernerfelt, Birger (1984). “A resource-based view of the firm”, Strategic Management Journal, Vol. 5, N° 2, p. 171-180.
- Yermack, David (1996). “Higher market valuation of companies with a small board of directors”, Journal of Financial Economics, Vol. 40, N° 2, p. 185-211.