Conflict Of Interest Problem In The Management-Controlled Firms
ABSTRACT This study hypothesizes that the conflict of interest problem exists in the management-controlled firms. The problem does not exist in the owner-controlled firms. This study supports these hypotheses. The conflict of interest problem occurs in the management-controlled firms because manager...
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| Format: | Article |
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[Yogyakarta] : Universitas Gadjah Mada
2001
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| _version_ | 1797019371202150400 |
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| author | Perpustakaan UGM, i-lib |
| author_facet | Perpustakaan UGM, i-lib |
| author_sort | Perpustakaan UGM, i-lib |
| collection | UGM |
| description | ABSTRACT
This study hypothesizes that the conflict of interest problem exists in the management-controlled firms. The problem does not exist in the owner-controlled firms. This study supports these hypotheses.
The conflict of interest problem occurs in the management-controlled firms because managers tend to emphasize their wealth by increasing sales or profit but stock returns at the expense of shareholders' wealth. Shareholders are more concerned with the increase of stock returns, which is related directly to their wealth. On the other hand, in the owner-controlled firms, since the managers are also the owners of the firms, the conflict of interest problem does not exist.
The conflict of interest problem still persists even though CEOs have been compensated well. The problem cannot be solved by how much CEOs are paid, but by how they are paid. The problem can be reduced by designing compensation scheme that increases the ownership of the CEOs. This situation had already been recognized by the U.S. firms, that of the 374 firms in the sample, 80% or 300 firms are the owner-controlled firms.
Keywords: Compensation, conflict of interest, agency relationship. |
| first_indexed | 2024-03-05T23:08:10Z |
| format | Article |
| id | oai:generic.eprints.org:25935 |
| institution | Universiti Gadjah Mada |
| last_indexed | 2024-03-05T23:08:10Z |
| publishDate | 2001 |
| publisher | [Yogyakarta] : Universitas Gadjah Mada |
| record_format | dspace |
| spelling | oai:generic.eprints.org:259352014-06-18T00:32:30Z https://repository.ugm.ac.id/25935/ Conflict Of Interest Problem In The Management-Controlled Firms Perpustakaan UGM, i-lib Jurnal i-lib UGM ABSTRACT This study hypothesizes that the conflict of interest problem exists in the management-controlled firms. The problem does not exist in the owner-controlled firms. This study supports these hypotheses. The conflict of interest problem occurs in the management-controlled firms because managers tend to emphasize their wealth by increasing sales or profit but stock returns at the expense of shareholders' wealth. Shareholders are more concerned with the increase of stock returns, which is related directly to their wealth. On the other hand, in the owner-controlled firms, since the managers are also the owners of the firms, the conflict of interest problem does not exist. The conflict of interest problem still persists even though CEOs have been compensated well. The problem cannot be solved by how much CEOs are paid, but by how they are paid. The problem can be reduced by designing compensation scheme that increases the ownership of the CEOs. This situation had already been recognized by the U.S. firms, that of the 374 firms in the sample, 80% or 300 firms are the owner-controlled firms. Keywords: Compensation, conflict of interest, agency relationship. [Yogyakarta] : Universitas Gadjah Mada 2001 Article NonPeerReviewed Perpustakaan UGM, i-lib (2001) Conflict Of Interest Problem In The Management-Controlled Firms. Jurnal i-lib UGM. http://i-lib.ugm.ac.id/jurnal/download.php?dataId=8943 |
| spellingShingle | Jurnal i-lib UGM Perpustakaan UGM, i-lib Conflict Of Interest Problem In The Management-Controlled Firms |
| title | Conflict Of Interest Problem In The Management-Controlled Firms |
| title_full | Conflict Of Interest Problem In The Management-Controlled Firms |
| title_fullStr | Conflict Of Interest Problem In The Management-Controlled Firms |
| title_full_unstemmed | Conflict Of Interest Problem In The Management-Controlled Firms |
| title_short | Conflict Of Interest Problem In The Management-Controlled Firms |
| title_sort | conflict of interest problem in the management controlled firms |
| topic | Jurnal i-lib UGM |
| work_keys_str_mv | AT perpustakaanugmilib conflictofinterestprobleminthemanagementcontrolledfirms |