It's A Battle between Politics the Free Market

Choi, Heeri (2009) It's A Battle between Politics the Free Market. [Dissertation (University of Nottingham only)] (Unpublished)

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This research contributes to the CEO remuneration literature in the banking sector by examining the issue from the VOC perspective. It compares the two of the most prominent examples of Co-ordinated Market Economy and Liberal Market Economy, the UK and Germany. The research examines the Royal Bank of Scotland and the Deutsche Bank in depth in order to analyse the differences in the banking sector CEO remuneration designs between a CME and a LME.

Firstly, the research reviews the relevant literature on VOC, the theories used to examine CEO remuneration, the differences in the corporate governance systems in the UK and Germany and the implications of changes in institutional settings. Finally, the research concludes that the researcher was able find very little evidence to suggest that there are any significant differences in the CEO remuneration designs due to the fact that major financial firms are competing internationally and changes market demands. These differences manifested whilst investigating the German banking sector, the researcher found some evidences that the German banks are adopting market based system with highly dispersed ownership therefore facing the same degree of agency problem as the UK banking sector.

This paper also presents evidence that may be a need to change the CEO remuneration in the UK banking sectors as well as that the institutional norm is changing brought on by the current financial crisis other past corporate scandals. Therefore it would appear that the both countries are experiencing certain degree of institutional changes. However, the research does recommend that the UK strengthens the enforceability of its recommended corporate governance code as it is the case in Germany.

The research also reports that there may be some merit in the Germany’s two tier governance system. It does appear to reduce the potential for inner board intension that can occur in a unitary board system. However, whilst it may better address the monitoring problem due to the pressures from competing in a global market the two tier system appears to have very little impact on the CEO remuneration designs.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 04 Feb 2010 10:44
Last Modified: 23 Oct 2016 03:51

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