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Differences in CEO compensation under large and small institutional ownership

Tosun, Onur ORCID: 2020. Differences in CEO compensation under large and small institutional ownership. European Financial Management 26 (4) , pp. 1031-1058. 10.1111/eufm.12252

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I examine the influence of large and small institutional investors on different components of chief executive officer (CEO) compensation, using U.S. data for 2006–2015. An increase in large institutional ownership reduces total pay and current incentive compensation (i.e. options, stocks, bonus pay), whereas small institutional investors lower long‐term incentive pay (i.e. pension, deferred pay, stock incentive pay). These findings are consistent with managerial agency theory and the substitution of incentive pay by institutional monitoring. The effects are stronger for higher ownership levels and firms with weak governance, less financial distress, long‐tenured CEOs, multiple segments, and more free cash flow.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Publisher: Wiley:
ISSN: 1354-7798
Date of First Compliant Deposit: 20 December 2019
Date of Acceptance: 11 December 2019
Last Modified: 12 Nov 2023 20:18

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