Vicente Salas Fumás

Relative performance evaluation of management: The effects on industrial competition and risk sharing☆

Abstract This paper shows that the use by firms in an oligopolistic industry of relative performance measures to evaluate their managers, may cause a conflict between the objectives of risk sharing and the implications for strategic competition derived from such performance measures, specially if firms compete in prices. We also show that if managers are risk neutral, the Stackelberg leader follower solution is among the multiple subgame perfect equilibria to the problem of strategic output competition; therefore relative performance evaluation of managers provides a mechanism to implement such solution.

Ownership structure and firm performance: Some empirical evidence from Spain

The ‘managerial’ and the ‘contractual’ theories of the firm imply different causes and consequences for the relationship between ownership and performance of firms. This paper provides a test of the two conflicting theories, using ownership and performance data from a sample of Spanish family- and non-family-controlled firms. We find evidence in support of the contractual theory of the firm, according to which firms choose their ownership structure maximizing economic value, net of contractual costs.

The compensation of Spanish executives: A test of a managerial talent allocation model

Abstract This paper provides empirical evidence in support of the theory on how managerial capabilities are allocated in hierarchical organizations developed by Rosen (Bell Journal of Economics, 1982, Autumn, 311–323). The evidence is obtained from a sample of Spanish firms and covers managers at the top and middle positions in the hierarchy. Most previous empirical work has related Rosens model to the elasticity of compensation to size obtained estimating a structural model that explains the salary of the managers as a function of the size of the firm. But since compensation and size are both endogenous variables, the elasticity estimated by this way will be inconsistent. Using human capital variables as proxies of managerial talent, we estimate the reduced form of the model and therefore the inconsistency problem is overcome.