Does Price Fixing Benefit Corporate Managers?

Artiga González, Tanja; Schmid, Markus; Yermack, David

doi:10.2139/ssrn.2230771

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Does Price Fixing Benefit Corporate Managers?

NYU Working Paper No. FIN-13-002

University of St.Gallen, School of Finance Research Paper No. 2013/9

56 Pages Posted: 10 Mar 2013 Last revised: 28 Oct 2017

See all articles by Tanja Artiga González

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

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: Suggested Citation

Artiga Gonzalez, 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