The impact of economic regulation on attempts to curb expense preference behavior: a micro-data analysis of CEO compensation schemes for electric utilities

This study uses a large, micro data set to present evidence which suggests that owners of regulated electric utilities have little incentive to struct ure CEO compensation packages in an effort to curb potential expense prefer ence behavior. Because such potential behavior occurs, or would occur, at n o cost to the firm (or the firm's owners), little incentive exists to struc ture compensation schemes in a way that would curb such behavior (e.g. by c ompensating 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.