Deregulation and the Adaption of Governance Structures: The Case of the U.S. Airline Industry.

Deregulation provides a natural experiment for examining how governance adapts to structural changes in the business environment. We investigate the evolution of governance struture -- ownership concentration, compensation policy, and board composition -- in the U.S. airline industry during a 22 year period surrounding the Airline Deregulation Act of 1978.Consistent wit theory, we find that after deregulation (i) equity ownership is more concentrated, (ii) CEO pay increases, (iii) stock option grants to CEO's increase , and (iV) board size decreases.