Privatization effects on corporate governance, strategy and compensation systems

Whereas research in privatization generally adopts a macroeconomic or political perspective, organizational and managerial implications are current aspects in need of further examination. This study analyzes how firms’ corporate governance and strategy relate to the use of management compensation systems after privatization. A multiple-case study in five Spanish companies leads to a series of contributions: first, variables that traditionally relate to greater board independence in monitoring do not suffer from variation after privatization. Second, the interests of the new firms’ ownership have an impact on firm strategy after privatization. Finally, compensation system design clearly aligns with firm strategy after privatization.