Literature on the divorce of ownership from control has
emphasised the declining proportion of shares owned by salaried
managers who control large companies. Because these salaried
managers have negligible proprietarial interest in the companies
they manage, some writers have suggested that they will have
different motives to owner-managers. In particular, managers'
direct pecuniary interests may cause them to pursue company growth
at the expense of profit, for managers' salaries tend to be related
to the size of the companies which they manage rather than the
profitability of those companies. These alternate motivations were
incorporated in various managerial theories of the firm developed in
the late 1960's which emphasised company growth as a key objective.
An investigation of the shareholdings and salaries of the
directors of major British companies confirms that the proportion
of total shares held by company directors has fallen over the years,
though it is argued that shareholdings are still large enough to
allow directors to exercise effective control over their companies.
In addition, while the proportion of total shares held by directors
is small, these shareholdings are often large in absolute terms and
constitute a significant source of directors' income, though the
size of directors' shareholdings varies considerably between
industries. Combined dividend income and capital appreciation of
shareholdings match the remuneration which directors receive as
salary income. It is argued that these profit-related income
elements are sufficiently large to cause directors to attach
priority to profitability goals. This proposition is explored
through statistical analysis of the relationship between directors'
remuneration and company performance. Regression results show that
as the definition of directors' remuneration is broadened to include
dividends and capital appreciation as well as salary, company size
variables diminish in importance as determinants of remuneration and
profitability variables predominate. Managers do have an incentive
to pursue profitability. / Bradford University Research Committee
| Identifer | oai:union.ndltd.org:BRADFORD/oai:bradscholars.brad.ac.uk:10454/4201 |
| Date | January 1985 |
| Creators | Lowes, Bryan |
| Contributors | Sparkes, J.R., Buckley, Peter J. |
| Publisher | University of Bradford, Postgraduate School of Studies in Social Sciences. |
| Source Sets | Bradford Scholars |
| Language | English |
| Detected Language | English |
| Type | Thesis, doctoral, PhD |
| Rights | <a rel="license" href="http://creativecommons.org/licenses/by-nc-nd/3.0/"><img alt="Creative Commons License" style="border-width:0" src="http://i.creativecommons.org/l/by-nc-nd/3.0/88x31.png" /></a><br />The University of Bradford theses are licenced under a <a rel="license" href="http://creativecommons.org/licenses/by-nc-nd/3.0/">Creative Commons Licence</a>. |
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