The Impact of Economic Regulation on Attempts to Curb Expense Preference Behavior: A Micro-Data Analysis of CEO Compensation Schemes for Electric Utilities

Document Type

Article

Publication Date

4-1-1999

Department

Management and International Business

Abstract

This study uses a large, micro data set to present evidence which suggests that owners of regulated electric utilities have little incentive to structure CEO compensation packages in an effort to curb potential expense preference behavior. Because such potential behavior occurs, or would occur, at no cost to the firm (or the firm's owners), little incentive exists to structure compensation schemes in a way that would curb such behavior (e.g. by compensating them with incentive bonus plans and stock options). The results presented here augment those which examine other industries (e.g. banking) in an effort to point out the relationships between ownership organization, political involvement and expense preference behavior. (C) 1999 Elsevier Science B.V. All rights reserved. IEL classification: Q40.

Publication Title

Energy Economics

Volume

21

Issue

2

First Page

185

Last Page

194

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