This study investigates whether the agency cost of corporate crime leading to executive pay is greater when monitoring and incentive alignment activities by principals is low. The results indicate that executive compensation is positively associated with the incidence of corporate crime in manager controlled firms but not in owner controlled firms. Implications for the monitoring of business activities in owner and manager controlled firms are developed.
AMIHUD, Y., & LEV, B.Risk reduction as a managerial motive for conglomerate mergers. Bell Journal of Economics, 1981, 12, 605-617.
2.
BAKER, G. P., JENSEN, M. C., & MURPHY, K. J.Compensation and incentives: Practice vs. theory. Journal of Finance, 1988, 43(3), 593-616.
3.
BANTEL, K., & JACKSON, S.Top management and innovations in banking: Does the composition of the top team make a difference?Strategic Management Journal, 1989, 10, 107-124.
4.
BAUCUS, M. B.Why firms do it and what happens to them: A reexamination of the theory of illegal corporate behavior. In Research in corporate social performance and policy (Vol. 11). Greenwich, CT: JAI Press, 1989, pp. 93-118.
5.
BAUCUS, M. B., & NEAR, J. P.Can illegal corporate behavior be predicted? An event history analysis. Academy of Management Journal1989, 34(1), 9-36.
6.
BAUMOL, W. J.Business behavior, value and growth. New York: MacMillan, 1959.
7.
BECKER, G. S.Crime and punishment: An economic approach. Journal of Political Economy, 1968, 76, 169-217.
8.
BECKER, G. S.Tailoring punishment to white-collar crime: A mix of fines and lawsuits-with the occasional prison term-would remove the profit motive from corporate crime. Business WeekOctober 28, 1985, 20-20.
9.
BERENBEIM, R. E.An outbreak of ethics. Across the Board, 1988, 25, 14-20.
10.
BERLE, A. A., & MEANS, G. C.The modern corporation and private property. New York: Commerce Clearing House, 1932.
11.
BLAIR, R. D., & KASERMAN, D. L.Ownership and control in the modern corporation: Antitrust implications. Journal of Business Research, 1983, 11, 333-343.
BRADY, G. F., & HELMICH, D. L.Executive succession. Englewood Cliffs, NJ: Prentice Hall, 1984.
14.
BUCKLEY, W. F. JR.Disgrace abounding (corruption and fraud in politics and business). National Review, 1988, 16 Sept, 40, 65-65.
15.
THE BUSINESS ROUNDTABLE. The role and composition of the board of directors of the large, publicly owned corporation. New York: The Business Roundtable, 1978.
16.
BUSINESS WEEKThe job nobody wants. 1986, 8 September, 56-61.
17.
BUSINESS WEEKThe battle for corporate control, 18 May, 1987, 102-108.
18.
BUSINESS WEEKBusinesses are signing up for ethics 101. 15 February, 1988, 56-57.
19.
BYRNE, J. A.Business are signing up for ethics 101. Business WeekFeb 15, 1988, 56-57.
20.
CHILD, J.Organization structure, environment, and performance: The role of strategic choice. Sociology, 1972, 6, 1-22.
21.
CHITAYAT, G.Working relationships between the chairman of the board of directors and the CEO. Management International Review (Germany), 1985, 25(3), 65-70.
22.
CLINARD, M. B.Corporate ethics and crime. Beverly Hills, California: Sage, 1983.
23.
CLINARD, M. B., & YEAGER, P. C.Corporate crime. New York: The Free Press, 1980.
24.
COCHRAN, P. L., & NIGH, D.Illegal corporate behavior and the question of moral agency: An empirical examination. Research in Corporate Social Performance and Policy, 1987, 9, 73-91.
CONKLIN, J.Illegal but not criminal. Englewood Cliffs: Prentice Hall, 1977.
27.
COUGHLAN, A. T., & SCHMIDT, R. M.Executive compensation, management turnover, and firm performance: An empirical investigation. Journal of Accounting and Economics, 1985, 7, 43-66.
28.
CROCK, S.How to take a bite out of corporate crime. Business Week, 15 July, 1985, 122-123.
29.
CRYSTAL, G. S.Too many make-any-excuse CEOs. Fortune, 21 July 1986, 114(2) 116-117.
30.
CRYSTAL, G.The whacky world of CEO pay. Fortune, June 6, 1988, 68-78.
31.
CRYSTAL, G.Seeking the sense in CEO pay. Fortune, June 5, 1989, 88-104.
32.
CRYSTAL, G.In search of excess: The overcompensation of American executives. New York: Norton, 1991.
33.
CUBBIN, J., & LEECH, D.The effect of shareholding dispersion on the degree of control in British companies: theory and measurement. The Economic Journal, 1983, 93, 351-369.
34.
DALTON, D. R., & KESNER, I. F.On the dynamics of corporate size and illegal activity: An empirical assessment. Journal of Business Ethics, 1988, 7, 861-870.
35.
DAVIS, G. F., & STOUT, S. K.Organization theory and the market for corporate control: A dynamic analysis of the characteristics of large takeover targets, 1980-1990. Administrative Science Quarterly, 1992, 37, 605-633.
36.
DEMSETZ, H., & LEHN, K.The structure of corporate ownership: Causes and consequences. Journal of Political Economy, 1985, 93(6), 1155-1177.
37.
DYL, E. A.Corporate control and management compensation: Evidence on the agency problem. Managerial and Decision Economics, 1988, 9(1), 21-25.
38.
THE ECONOMIST. Incurable mergeritis. The Economist, 23 April, 1988, 157, 14-14.
39.
EISENHARDT, K.Agency theory: An assessment and review. Academy of Management Review, 1989, 14(1) 57-74.
40.
ERMANN, M. D., & LUNDMAN, R. J.Corporate and governmental deviance (2nd ed.). New York: Oxford University Press, 1982.
41.
FAMA, E. F.Agency problems and the theory of the firm. Journal of Political Economy, 1980, 88, 288-307.
42.
FAMA, E. F., & JENSEN, M. C.Separation of ownership and control. Journal of Law and Economics, 1983, 26, 301-325.
43.
FINKELSTEIN, S., & HAMBRICK, D. C.Chief executive compensation: A study of the intersection of markets and political processes. Strategic Management Journal, 1989, 10, 121-134.
44.
FINKELSTEIN, S., & HAMBRICK, D. C.Top-management-team tenure and organizational outcomes: the moderating role of managerial discretion. Administrative Science Quarterly, 1990, 35, 484-503.
45.
FREDERICK, W. C., & WEBER, J.The values of corporate managers and their critics: An empirical description and normative implications. Research in Corporate Social Performance and Policy, 1987, 9, 121-152.
46.
FURTADO, E. P. H., & ROZEFF, M. S.The wealth effects of company initiated management changes. Journal of Financial Economics, 1987, 18, 147-160.
47.
GAUTSCHI, F. H., & JONES, T. M.Illegal corporate behavior and corporate board structure. Research in Corporate Social Performance and Policy, 1987, 9, 93-106.
48.
GENEEN, H. S.Why directors can't protect the shareholders. Fortune, 1984, September 17, 28-32.
49.
GLOVER, J. D.The many roles of the chief executive. In J. D. Glover and G. A. Simon (Eds.), Chief executive handbookHomewood, Illinois: Dow-Jones Irwin, 1976, pp. 3-21.
50.
GOMEZ-MEJIA, L. R., TOSI, H., & HINKIN, T. R.Managerial control, performance, and executive compensation. Academy of Management Journal1987, 30, 51-70.
51.
HAMBRICK, D. C., & FINKELSTEIN, S.Managerial discretion: A bridge between polar views on organizations. In L. L. Cummings and B. M. Staw (Eds.), Research in Organizational Behavior, (Vol. 9). Greenwich, CT: JAI Press, 1987, 369-406.
52.
HAMBRICK, D. C., & MASON, P. A.Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 1984, 9, 193-206.
53.
HARVARD BUSINESS REVIEWHow much is enough?1992, 70,(4) 130-139.
54.
HATFIELD, R. S.The changing corporate environment: Problems and opportunities. In G. C. Greanias and D. Windsor (Eds.), The changing boardroom: Making policy and profits in an age of corporate citizenship. Houston: Gulf Publishing Co., 1982.
55.
HERMAN, E. S.Corporate control, corporate power. New York: Cambridge University Press, 1981.
56.
HILL, C. W. L., & SNELL, S. A.Effects of ownership structure and control on corporate productivity. Academy of Management Journal, 1989, 32(1), 25-46.
57.
HILL, C. W. L., KELLEY, P. C., AGLE, B. R., HITT, M. A., & HOSKISSON, R. E.An empirical examination of the causes of corporate wrongdoing in the United States. Human Relations, 1992, 45(10), 1055-1077.
58.
KERR, J., & BETTIS, R. A.Boards of directors, top management compensation, and shareholder returns. Academy of Management Journal; 1987, 30, 645-664.
59.
KESNER, I. E., & DALTON, D. R.Boards of directors and the checks and (im)balances of corporate governance. Business Horizons, 1986, September-October, 17-23.
60.
KESNER, I. F., VICTOR, B., & LAMONT, B. T.Board composition and the commission of illegal acts: An investigation of Fortune 500 companies. Academy of Management Journal, 1986, 29(4), 789-799.
61.
LAMBERT, R. A., & LARCKER, D. F.Executive compensation, corporate decision-making and shareholder wealth: A review of the evidence. Midland Corporate Finance Journal, 1985, 26-22.
62.
LEWELLEN, W., LODERER, C., & MARTIN, K.Executive compensation and executive incentive problems: An Empirical Analysis. Journal of Accounting and Economics, 1987, 9, 287-310.
63.
LORSCH, J.Pawns or potentates: The reality of America's corporate boards, Boston: Harvard Business School Press, 1989.
64.
LOUDEN, J. K.The director. New York: American Management Association, 1982.
65.
LOUIS, A. M.Business is bungling long term compensation. Fortune, 1984, 110(2), 64-69.
66.
MACE, M. L.Directors: Myth and reality. Cambridge, MA: Harvard University Graduate School of Business Administration, 1971.
67.
McEACHERN, W. A.Managerial control and performance. Lexington, MA: D.C. Heath Company, 1975.
68.
METZENBAUM, H. M.Too soft on corporate crime. Financial World, April 15, 1986, 160-160.
69.
MIZRUCHI, M. S.Who controls whom? An examination of the relation between management and boards of directors in large American corporations. Academy of Management Review, 1983, 8(3), 426-435.
70.
MONSEN, R. J., JR., & DOWNS, A.A theory of large managerial firms. The Journal of Political Economy, June 1965, 221-236.
71.
MURPHY, K. J.Corporate performance and managerial remuneration: An empirical analysis. Journal of Accounting and Economics, 1985, 7, 11-42.
72.
NADER, R., & ANDREWS, K. R.Reforming corporate governance: Difficulties in overseeing ethical policy. California Management Review, 1984, 26(4), 126-137.
73.
O'REILLY, C. A., MAIN, B. G., & CRYSTAL, G. S.CEO compensation as tournament and social comparison: A tale of two theories. Administrative Science Quarterly, 1988, 33, 257-274.
74.
PATMAN STAFF REPORT. Commercial banks and their trust activities: Emerging influence on the American economy. U.S. Congress, House, Committee on Banking and Currency, Domestic Finance (1968). Committee, 90th Congress, 2nd session. Washington, D.C.: Government Printing Office, 1968.
75.
PELTZMAN, S.The effect of FTC advertising regulation. The Journal of Law and Economics, 1981, 24, 403-448.
76.
RAPPAPORT, A.Executive incentives vs. corporate growth. Harvard Business Review, 1978, July-August, 81-88.
77.
REID, S. R.Mergers, managers and the economy. New York: McGraw Hill, 1968.
78.
REYNOLDS, L.Congress to corporations: Clean up your act!Management Review, 1987, 76, 23-24.
79.
ROSS, I.How lawless are big companies?Fortune, 1 December, 1980, 57-64.
80.
SALANCIK, G. R., & PFEFFER, J.Effects of ownership and performance on executive tenure in U.S. corporations. Academy of Management Journal1980, 23, 653-664.
81.
STANO, M.Monopoly power, ownership control, and corporate performance. Bell Journal of Economics, 1976, 672-679.
82.
STAW, B. M., & SZWAJKOWSKI, E.The scarcity-munificence component of organizational environments and the commission of illegal acts. Administrative Science Quarterly, 1975, 20, 345-354.
83.
STRACHAN, J. L., SMITH, D. B., & BEEDLES, W. L.The price reaction to (alleged) corporate crime. The Financial Review, 1983, 121-132.
84.
TEMPORARY NATIONAL ECONOMIC COMMITTEE. Investigation of concentration of economic power, monograph No. 29: "The distribution of ownership in the 200 largest non-financial corporation."Washington, D.C.: U.S. Government Printing Office, 1940.
85.
TOSI, H., & GOMEZ-MEJIA, L. R.The decoupling of CEO pay and performance: An agency theory perspective. Administrative Science Quarterly, 1989, 34(2), 169-189.
86.
U.S. NEWS AND WORLD REPORT. Corporate crime: The untold story. September 6, 1982, 25-30.
87.
VANCE, S. C.Corporate leadership: Boards, directors and strategy. New York: McGraw Hill Book Company, 1983.
88.
WALDO, C. N.Boards of directors: Their changing roles, structure and information needs. Westport, CT: Quorum Books, 1985.
89.
WALSH, J. P., & SEWARD, J. K.On the efficiency of internal and external corporate control mechanisms. Academy of Management Review, 1990, 15(3), 421-458.
90.
WILLIAMS, M. J.Why chief executives' pay keeps rising. Fortune, 1 April, 1985, 66-76.
91.
WOKUTCH, R. E., & SPENCER, B. A.Corporate saints and sinners: The effects of philanthropic and illegal activity on organizational performance. California Management Review, 1987, 29(2), 62-77.
92.
WOODWORTH, W.The scandalous pay of the corporate elite. Business and Society Review, 1987, 61, 22-26.
