Corporate Ownership and Initial Training in Britain, Germany and Switzerland

Swiss Leading House Working Paper No. 55

4 Pages Posted: 13 Apr 2011

See all articles by Paul Ryan

Paul Ryan

University of Cambridge - King's College, Cambridge

Karin Wagner

Fachhochschule fuer Technik und Wirtschaft

Silvia Teuber

University of Zurich - Institute for Business Administration; Swiss Leading House "Economics of Education, Firm Behaviour and Training Policies"

Uschi Backes-Gellner

University of Zurich - Institute for Business Administration; Swiss Leading House

Date Written: December 1, 2010

Abstract

This paper considers whether listed companies with dispersed ownership invest less in training than do other firms, as part of a short-termist stance caused by pressure from the stock market. An analytical framework that supports the proposition involves three factors: high agency costs between the shareholders and managers of listed firms that have dispersed ownership; the use of highly geared performance-related pay to reward top managers; and accounting conventions that distort performance measures by requiring that spending on intangible assets be expensed not amortised. Managers then have the incentive and ability to restrict spending on training in order to increase their remuneration. Countervailing factors, including institutions of corporate governance, may however weaken or destroy such effects. Evidence is presented concerning the initial training programmes of 56 companies in engineering and retailing in Britain, Germany and Switzerland. The evidence is consistent with ownership effects in both sectors, but those effects are at most moderate in both incidence and strength. The skill requirements of competitive success in product markets appear more important than ownership.

Keywords: skill formation, organizational performance, training institutions

JEL Classification: J24, M53

Suggested Citation

Ryan, Paul and Wagner, Karin and Teuber, Silvia and Backes-Gellner, Uschi, Corporate Ownership and Initial Training in Britain, Germany and Switzerland (December 1, 2010). Swiss Leading House Working Paper No. 55. Available at SSRN: https://ssrn.com/abstract=1808417 or http://dx.doi.org/10.2139/ssrn.1808417

Paul Ryan

University of Cambridge - King's College, Cambridge ( email )

Karin Wagner

Fachhochschule fuer Technik und Wirtschaft ( email )

Treskowallee 8
Berlin, 10313
Germany

Silvia Teuber

University of Zurich - Institute for Business Administration ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Swiss Leading House "Economics of Education, Firm Behaviour and Training Policies" ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Uschi Backes-Gellner (Contact Author)

University of Zurich - Institute for Business Administration ( email )

Plattenstrasse 14
8032 Zurich
Switzerland
+41 44 6344281 (Phone)
+41 44 6344370 (Fax)

Swiss Leading House ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

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