Abstract

PEREIRA, Ivo  and  ESPERANCA, José Paulo. Compensation and profitability in Portuguese family firms. Rev. Portuguesa e Brasileira de Gestão [online]. 2009, vol.8, n.1, pp.32-42. ISSN 1645-4464.

Variable compensation is usually supported by the belief that it is efficient in interest alignment between principals and agents. In public corporations, in particular, the solution of agency problems lies with the introduction of a variable compensation model, including stock options. This issue is still ignored in firms where the principal is also in charge of management. The empirical study of this phenomenon is exiguous and the background theory has suffered developments, like the introduction of family firms’ agency problems. This study is based on a comparative analysis of 102 of the biggest Portuguese firms and confirms the larger use of variable compensation by public firms, but shows also that the older family firms tend to use more variable compensation.

Keywords : Agency Theory; Altruism; Family Firms; Compensation Models.

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