Essays on the relation between institutional ownership composition and the structure of CEO compensation.

详细信息   

• 作者：Shin ; Jae Yong.
• 学历：Doctor
• 年：2006
• 导师：Matsumura, Ella Mae
• 毕业院校：The University of Wisconsin
• 专业：Business Administration, Accounting.
• ISBN：9780542885228
• CBH：3234576
• Country：USA
• 语种：English
• FileSize：7046856
• Pages：151

文摘

This dissertation investigates the relation between the structure of CEO compensation and the composition of firms' institutional ownership in terms of investment horizons and legal type. I provide evidence that in companies with more shares held by institutions with short-term investment horizons, executive compensation is structured with preference towards these short-term institutions' preferences (e.g., more use of stock options that do not need to be expensed and larger annual bonus penalties for missing quarterly earnings benchmarks). These findings suggest that if firms' institutional shareholders act as traders rather than owners, this myopic investment behavior will likely place undue pressures for short-term performance on the firms' boards of directors.;I also provide evidence that there is a substitutive relation between institutional monitoring induced by long investment horizons and the degree of pay for performance. This result is in contrast to the findings by prior research documenting a complementary relation between institutional monitoring induced by large institutional ownership concentration and the degree of pay for performance.;Analyses based on legal type question the assumption of previous literature that public pension funds, mutual funds, and endowments and foundations are relatively pressure-resistant to firms' management because these investors are less likely to have a business relationship with firms. Consistent with recent assertions in the business press that mutual funds' desire to sell 401(k) management and other financial services to the same companies can compromise their monitoring capabilities, I find that institutions generally do not appear to influence their portfolio firms to design CEO compensation packages that are more sensitive to firm performance.;This dissertation contributes to the literature that examines the role of shareholder investment horizon in corporate governance and to recent debates regarding whether institutions such as mutual funds are truly pressure-resistant monitors of executive pay practice.