Browsing by Author "Guest, Paul M."
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Item Open Access Board structure and executive pay: evidence from the UK(Oxford University Press, 2010-11-15T00:00:00Z) Guest, Paul M.We examine the impact of board structure on executive pay for 1,880 UK public firms over the period 19832002, using panel data analysis. First, the proportion of non-executive directors tends to decrease the rate of increase in executive pay whereas board size tends to increase it. Second, the proportion of non-executives strengthens the relation between the rate of increase in executive pay and changes in performance. In particular, although for firms in general the payperformance link is much weaker when performance is poor, a higher proportion of non-executives strengthens this link considerably. Finally, firms that increase the number of non-executives in order to comply with the Cadbury Code of 1992, experience both a decline in the rate of increase in executive pay and an increase in payperformance sensitivity.Item Open Access The determinants of board size and composition: Evidence from the UK(Elsevier, 2008-02) Guest, Paul M.This paper examines the trends and determinants of board structure for a large sample of UK firms from 1981 to 2002. We extend the predominantly US based literature in a number of important ways. Firstly, a comparative analysis of the UK and US legal and institutional settings leads us to hypothesize that UK boards will play a weaker monitoring role and hence board structures will not be determined by monitoring related factors. Our evidence supports this conjecture, showing that board structure determinants differ in predictable ways across different institutional settings. Secondly, in contrast to recent US mandatory reforms, UK reforms have been voluntary. As such they provide an interesting comparison, being arguably more effective than a mandatory approach by allowing firms to choose board structures most appropriate for their own needs. Our results support this point of view. Although the UK reforms do have a significant impact on board structures, a large number of firms choose not to comply, and those that do appear to do so for strong economic reasons. The reforms also appear to reduce the ability of well performing CEOs to influence board structures.Item Open Access The impact of board size on firm performance: evidence from the UK(Taylor & Francis, 2009-06) Guest, Paul M.We examine the impact of board size on firm performance for a large sample of 2746 UK listed firms over 1981-2002. The UK provides an interesting institutional setting, because UK boards play a weak monitoring role and therefore any negative effect of large board size is likely to reflect the malfunction of the board's advisory rather than monitoring role. We find that board size has a strong negative impact on profitability, Tobin's Q and share returns. This result is robust across econometric models that control for different types of endogeneity. We find no evidence that firm characteristics that determine board size in the UK lead to a more positive board size-firm performance relation. In contrast, we find that the negative relation is strongest for large firms, which tend to have larger boards. Overall, our evidence supports the argument that problems of poor communication and decision-making undermine the effectiveness of large boards.Item Open Access The impact of business group affiliation on performance: evidence from China's 'national champions'(Oxford University Press, 2010-07-10T00:00:00Z) Guest, Paul M.; Sutherland, DylanAn important aspect of China's economic reforms has been an ambitious policy to develop 100 or so large, internationally competitive business groups. Very little is known about these national champion groups or the benefits to subsidiary firms of belonging to them. This study, building from insights and methods used in existing literature, examines the performance of subsidiaries affiliated to China's national champion groups. Our results find that they perform comparatively well. We discuss possible reasons for this finding and comment more generally on the important role that business groups now play in China's reform and development.Item Open Access The Impact of Mergers and Acquisitions on Executive Pay in the United Kingdom(Blackwell Publishing, 2009-02) Guest, Paul M.This paper examines the impact of acquisitions by UK acquirers on executive pay. The overall sample shows a significant transitory pay increase. Pay changes are not affected by target nationality or organizational form, although initial cross-border acquisitions result in higher pay. Pay increases are higher following acquisitions of targets with high pay, but not high-pay countries. CEOs are rewarded equally for bad and good acquisitions, and those well rewarded are more likely to re-acquire. However, bad acquisitions do not increase CEO wealth because CEO shareholding value declines. Pay impacts are not affected by the acquiring firms’ strength of corporate governance.