Theses and Dissertations

Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)


Business Administration

First Advisor

Dr. Incheol Kim

Second Advisor

Dr. Yu Liu

Third Advisor

Dr. Siamak Javadi


This dissertation consists of four chapters, investigating the roles of employee representatives on the board in corporate policies in a sample of European countries. I examine the role of employee representatives on the board in firms’ merger and acquisition intensity and performance. In addition, I study the value-creating roles of these directors. In particular, I study the effects of employee representative directors on the firms’ pay gap between the CEO and average employees. In chapter Ι, I describe the background on the idea behind the presence of employee representatives and how the laws mandating this presence have changed in Europe.

In chapter II, I examine how, in European countries, the presence of employee-elected directors affects firms’ acquisitions. I find that firms with employee representatives on the board engage in fewer acquisitions. Moreover, acquiring firms with these directors exhibit higher announcement returns and higher post-merger productivity than those firms without. Subsample analyses show that this acquisition effect is more pronounced in firms with more severe agency conflicts, in high coordination industries, and in countries with less legal provisions supporting employee rights. Overall, my results suggest that employee representation on the board enhances shareholders’ wealth by curbing a firm’s excessive risk-taking behavior.

In chapter ΙΙI, I employ a sample consists of firms in 15 European countries between 2000 and 2014 and examine the effect of employee representatives on the pay gap between top manager and average employees. I find that the presence of employee representatives on the board is associated with lower pay gap by refraining from overcompensating CEOs. Sub-sample analyses indicate that the diminishing effect is stronger for firms exposed to more agency problems. Further, this effect is more pronounced when the employee directors have more power in the board as they are more socially connected, have longer tenure, and more influence in CEO pay setting by serving on a compensation committee. Overall, my results highlight the value enhancing role of the employee directors by turning the compensation in firms into a more fair setting.

In chapter ΙV, I summarize the findings of my dissertation and provide concluding remarks.


Copyright 2019 Amirhossein Fard. All Rights Reserved.