Equity-Based Compensation in New and Old Economy UK Firms

45 Pages Posted: 22 Apr 2004

See all articles by Stavroula Iliopoulou

Stavroula Iliopoulou

University of Essex

Jerry Coakley

University of Essex - Essex Business School

Date Written: June 2004

Abstract

We examine competing agency theory and managerial power hypotheses on the role of Equity-Based Compensation (EBC) in the UK. Our study covers a unique sample of some 61 old and new economy firms over the 1997-2001 period. Despite the fact that new economy firms award much higher levels of EBC as compared with old economy firms, we find no evidence that such awards influence company performance in either sector of the economy. Our study also indicates that loss of office compensation payments have detrimental effects on the incentive-alignment power of EBC. These are novel finding for the UK and they are consistent with the managerial power view of EBC.

Keywords: Managerial Compensation, Agency problems, ownership and control, Executive stock options

JEL Classification: G32, G35, J33

Suggested Citation

Iliopoulou, Stavroula and Coakley, Jerry, Equity-Based Compensation in New and Old Economy UK Firms (June 2004). EFMA 2004 Basel Meetings Paper. Available at SSRN: https://ssrn.com/abstract=493045 or http://dx.doi.org/10.2139/ssrn.493045

Stavroula Iliopoulou (Contact Author)

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Jerry Coakley

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom
+44 1206 872455 (Phone)
+44 1206 873429 (Fax)

HOME PAGE: http://www.essex.ac.uk/afm/staff/coakley.shtm

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