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The regulation of executive pay and economic theory

Arsalidou, Demetra 2011. The regulation of executive pay and economic theory. Journal of Business Law 2011 (5) , pp. 431-456.

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This article offers a critical re-examination of the theoretical justification of executive pay as an incentive mechanism. It questions the effectiveness of the agency theory in restraining the adverse impact of poor remuneration practices and supports the theory reformulation to recognise the corporation, rather than the shareholder as the principal in the typical agent-principal relationship. Further, the article examines the regulation of executive pay from two angles: before and after the failure of a company, It assesses the role of self-regulation as an ex-ante tool and considers its possible expansion in the control of excessive remuneration. It then examines the role of the law as an ex-post tool and addresses certain legal strategies available as general control mechanisms that would create incentives against the design of over-generous compensation schemes.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Law
Subjects: K Law > K Law (General)
Uncontrolled Keywords: Corporate Governance; Directors; Economic Conditions; Economic Theory; Principals; Remuneration
Publisher: Sweet & Maxwell
ISSN: 0021-9460
Last Modified: 04 Jun 2017 03:12

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