Dyballa, KatharinaKraft, Kornelius2015-07-172015-07-172015http://hdl.handle.net/2003/3415210.17877/DE290R-7883Contrary to previous literature we hypothesize that interests of labor may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientated decisions. We compile unique panel data on executive compensation over the periods 2006 to 2011 for 405 listed companies and use a Hausman-Taylor approach to estimate the effect of codetermination on the compensation design. Finally, codetermination has a significantly positive effect on performance-based components of compensation, which supports our hypothesis.enDiscussion Paper / SFB 823;22/2015Executive CompensationHausman-TaylorCorporate GovernancePrincipal-Agent TheoryCodetermination310330620working paper