Institutional shareholding as a corporate governance mechanism that drives ceo pay
comunitat-uji-handle:10234/9
comunitat-uji-handle2:10234/8648
comunitat-uji-handle3:10234/8649
comunitat-uji-handle4:
INVESTIGACIONMetadata
Title
Institutional shareholding as a corporate governance mechanism that drives ceo payDate
2019Publisher
ElsevierISSN
2340-9436Type
info:eu-repo/semantics/articlePublisher version
https://www.sciencedirect.com/science/article/pii/S2340943618301373#!Version
info:eu-repo/semantics/publishedVersionAbstract
We explore the effect of institutional directors on CEO pay (total, fixed and variable compensation). We delve particularly into the impact of pressure-sensitive and pressure-resistant institutional directors, who ... [+]
We explore the effect of institutional directors on CEO pay (total, fixed and variable compensation). We delve particularly into the impact of pressure-sensitive and pressure-resistant institutional directors, who respectively represent institutional investors who maintain and investors who do not maintain a business relationship with the firm whose board they serve on. Focusing on CEO total pay, the findings show that institutional and pressure-resistant directors on boards behave similarly, affecting CEO total pay in a nonlinear way: as the presence of institutional and pressure-resistant directors on boards increases, the monitoring hypothesis prevails, and subsequently, better corporate governance decreases CEO total pay. However, when their presence on boards exceeds a critical point, the entrenchment hypothesis holds, thereby leading to an increase in CEO total pay. Contrary to our predictions, pressure-sensitive directors do not affect CEO total pay. Regarding the CEO's compensation structure (fixed and variable), the results suggest that institutional and pressure-resistant directors increase fixed compensation and reduce variable pay, while pressure-sensitive directors affect neither fixed nor variable compensation. This evidence supports the view that institutional directors should be considered as a heterogeneous collective. [-]
Is part of
BRQ Business Research Quarterly, 2019Investigation project
Spanish Ministry of Economy, Industry and Competitiveness: ECO 2017-82259-R; University Jaume I: UJI-B2018-15Rights
info:eu-repo/semantics/openAccess
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- COFIN_Articles [215]
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