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The Influence of Executive Incentives on the Strategy and Performance of Microfinance Investment Vehicles
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The Influence of Executive Incentives on the Strategy and Performance of Microfinance Investment Vehicles

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The Influence of Executive Incentives on the Strategy and Performance of Microfinance Investment Vehicles The Influence of Executive Incentives on the Strategy and Performance of Microfinance Investment Vehicles Presentation Transcript

  • The Influence of ExecutiveIncentives on the Strategyand Performance ofMicrofinance InvestmentVehiclesPontus Engstrom, University of AgderFIBE doctoral colloquium 2013
  • Introducing the research setting and the researchproblem Investment Microfinance Investor Vehicle Institution
  • Theory and how it relates to present insightsAgency theory Asymmetric Information Investment Investor Contract Vehicle
  • Theory of the motivated agent (Besley & Ghatak, 2005)•  Incentives are also perceived intrinsic benefits such as saving lives, defending a country or teaching students.•  True for public institutions with a sense of collective output•  True for non-profits and microfinance with dual-return (social and financial) Mission wage differential …with mission drift
  • Conceptual framework Risk strategy + Executive Performance + compensation Mediating variable +Independent variable Dependent variable Controlling for: size, growth, leverage, inflation and ownership
  • Hypothesizes•  Hypothesis 1: The higher the compensation, the higher the financial performance of firms, thus showing that the principal-agency situation is handled by aligning the interests of the principal (investor) with the agent (management).•  Hypothesis 2: The higher the compensation, the higher the risk, thus showing that the principal-agency situation is handled by aligning the interests of the principal (investor) with the agent (management).•  Hypothesis 3: The higher the risk, the higher the financial performance of firms, thus showing that the principal-agency situation is handled by aligning the interests of the principal (investor) with the agent (management). 6
  • Plan of study – cumbersome data collection•  Data collection from annual reports•  Interviews•  Research population: ~ 100 Investment Vehicles (MIVs)•  Sample: ~ 20 MIVs•  Correlation analysis
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