Corporate governance in the deregulated telecommunications industry: lessons from the airline industry

Deregulation of the telecommunications industry is likely to result in significant changes in the governance structures of telecommunications firms. In particular, ownership structures of telecoms are expected to become more concentrated, the level of executive compensation is expected to increase, executive pay is expected to become more sensitive to performance, and board sizes are expected to become smaller. Evidence from the airline industry shows that these governance changes occurred after this industry was deregulated in the US in 1978. Preliminary evidence on telecommunications firms indicates that similar changes are beginning to occur in the governance structures of telecom firms. (C) 2002 Elsevier Science Ltd. All rights reserved.