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Does Price Fixing Benefit Corporate Managers?

56 Pages Posted: 10 Mar 2013 Last revised: 15 Sep 2017

Tanja Artiga González

VU University Amsterdam

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance

David Yermack

New York University (NYU) - Stern School of Business

Date Written: September 12, 2017

Abstract

We study the effects of cartel participation on top corporate managers. Although a strong public interest exists in regulating price fixing, we find little evidence that either corporate governance or the legal system holds managers of cartel firms accountable. Instead, managers of cartel firms enjoy greater job security, receive higher cash bonuses, and extract more ex post compensation through timely exercise of stock options. Legal sanctions against individual managers are infrequent, with enforcement actions focused on corporations rather than their officers. Managers appear to use concealment strategies actively to limit detection of cartel membership by their boards and auditors.

Keywords: Cartels, price fixing, corporate governance, executive compensation

JEL Classification: D43, G34, K42, L40, M43

Suggested Citation

Artiga González, Tanja and Schmid, Markus and Yermack, David, Does Price Fixing Benefit Corporate Managers? (September 12, 2017). NYU Working Paper No. FIN-13-002; University of St.Gallen, School of Finance Research Paper No. 2013/9. Available at SSRN: https://ssrn.com/abstract=2230771 or http://dx.doi.org/10.2139/ssrn.2230771

Tanja Artiga Gonzalez

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, North Holland 1081 HV
Netherlands

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Rosenbergstrasse 52
St. Gallen, 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

David Yermack (Contact Author)

New York University (NYU) - Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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