Market structure, common ownership and coordinated manager compensation

Arbeitspapier

We study oligopolistic competition in product markets where the firms' quantity decisions are delegated to managers. Some firms are commonly owned by shareholders such as index funds whereas the other firms are owned by independent shareholders. Under such an asymmetric ownership structure, the common owners have an incentive to coordinate when designing the manager compensation schemes. This implicit collusion induces a less aggressive output behavior by the coordinated firms and a more aggressive behavior by the noncoordinated firms. The profits of the noncoordinated firms are increasing in the number of coordinated firms. The profits of the coordinated firms exceed the profits without coordination if at least 80 % of the firms are commonly owned - an astonishing resemblance to the merger literature.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: University of Tübingen Working Papers in Business and Economics ; No. 133

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Firm Organization and Market Structure ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Subject: Common ownership ; index funds ; shareholder coordination ; manager com-pensation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Neus, Werner ; Stadler, Manfred ; Unsorg, Maximiliane
• Event: Veröffentlichung
• (who): University of Tübingen, Faculty of Economics and Social Sciences
• (where): Tübingen
• (when): 2020

Further information

• DOI: doi:10.15496/publikation-40530
• Handle: http://hdl.handle.net/10419/215412
• URN: urn:nbn:de:bsz:21-dspace-991497
• Last update: 10.03.2025, 11:44 AM CET