Less pay and more sensitivity? institutional investor heterogeneity and ceo pay

Journal of Management

Volumn 37, Issue 6, 2011, Pages 1719-1746

  Shin, Jae Yong ^a   Seo, Jeongil ^b  

^a Seoul National University   (South Korea)

^b Sogang University   (South Korea)

Author keywords

CEO compensation; corporate governance; institutional investors

Indexed keywords

EID: 80053490300     PISSN: 01492063     EISSN: 15571211     Source Type: Journal    
DOI: 10.1177/0149206310372412     Document Type: Article

References (72)

1. Almazan A.,Hartzell J.C.,Starks L.T.Active institutional shareholders and costs of monitoring: Evidence from executive compensation.Financial Management. 2005;34:5-34.
2. Bascle G.Controlling for endogeneity with instrumental variables in strategic management research.Strategic Organization. 2008;6:285-327.
3. Bebchuk L.A.,Fried J.A.Executive compensation as an agency problem.Journal of Economic Perspectives. 2003;17:71-92.
4. Bebchuk L.A.,Fried J.A.Pay without performance. Boston: Harvard University Press; 2004:.
5. Bebchuk L.,Grinstein Y.The growth of executive pay.Oxford Review of Economic Policy. 2005;21:283-303.
6. Bergstresser D.,Philippon T.CEO incentives and earnings management.Journal of Financial Economics. 2006;80:511-529.
7. Bhagat S.,Black B.,Blair M.Relational investing and firm performance.Journal of Financial Research. 2004;27:1-30.
8. Black F.,Scholes M.The pricing of options and corporate liabilities.Journal of Political Economy. 1973;81:637-654.
9. Bloom M.,Milkovich G.T.Relationships among risk, incentive pay, and organizational performance.Academy of Management Journal. 1998;41:283-297.
10. Brandes P.,Goranova M.,Hall S.Navigating shareholder influence: Compensation plans and the shareholder approval process.Academy of Management Perspectives. 2008;22:41-57.
11. Brickley J.A.,Lease R.C.,Smith C.W.Ownership structure and voting on antitakeover amendments.Journal of Financial Economics. 1988;20:267-291.
12. Burns N.,Kedia S.The impact of performance-based compensation on misreporting.Journal of Financial Economics. 2006;79:35-67.
13. Bushee B.J.Do institutional investors prefer near-term earnings over long-run value?.Contemporary Accounting Research. 2001;18:207-246.
14. Bushee B.J.Identifying and attracting the "right" investors: Evidence on the behavior of institutional investors.Journal of Applied Corporate Finance. 2004;16:28-35.
15. Bushee B.J.,Carter M.,Gerakos J.Institutional investor preferences for corporate governance mechanisms. Philadelphia: University of Pennsylvania; 2007:.
16. Bushman R.M.,Smith A.J.Financial accounting information and corporate governance.Journal of Accounting and Economics. 2001;32:237-333.
17. Carpenter M.A.The price of change: The role of CEO compensation in strategic variation and deviation from industry strategy norms.Journal of Management. 2000;26:1179-1198.
18. Carpenter M.A.,Westphal J.D.The strategic context of external network ties: Examining the impact of director appointments on board involvement in strategic decision making.Academy of Management Journal. 2001;44:639-660.
19. ChanG.2004. CalPERS wants to curb soaring executive pay. http://sacbee.com. November16, 2004.
20. Chen X.,Harford J.,Li K.Monitoring: Which institutions matter?.Journal of Financial Economics. 2007;86:279-305.
21. Chowdhury S.D.,Wang E.Z.Institutional activism types and CEO compensation: A time-series analysis of large Canadian corporations.Journal of Management. 2009;35:5-36.
22. Coffee J.Liquidity versus control: The institutional investor as corporate monitor.Columbia Law Review. 1991;91:1277-1368.
23. Core J.E.,Guay W.R.The use of equity grants to manage optimal equity incentive levels.Journal of Accounting and Economics. 1999;28:151-184.
24. Core J.E.,Guay W.R.Estimating the value of employee stock option portfolios and their sensitivities to price and volatility.Journal of Accounting Research. 2002;40:613-630.
25. Core J.E.,Guay W.R.,Verrecchia R.E.Price versus non-price performance measures in optimal CEO compensation contracts.Accounting Review. 2003;78:957-981.
26. Core J.E.,Holthausen R.W.,Larcker D.F.Corporate governance, chief executive officer compensation, and firm performance.Journal of Financial Economics. 1999;51:371-406.
27. Corporate Library. 2006. Enablers of excess: Mutual funds and overpaid American CEO. Washington, DC, and Portland, ME: American Federation of State, County and Municipal Employees and the Corporate Library.
28. Crystal G.S.In search of excess: The overcompensation of American executives. New York: Norton; 1991:.
29. David P.,Hitt M.A.,Gimeno J.The influence of activism by institutional investors on R&D.Academy of Management Journal. 2001;44:144-157.
30. David P.,Kochhar R.,Levitas E.The effect of institutional investors on the level and mix of CEO compensation.Academy of Management Journal. 1998;41:200-208.
31. Davis G.F.,Kim E.H.Business ties and proxy voting by mutual funds.Journal of Financial Economics. 2007;85:552-570.
32. Davis G.F.,Thompson T.A.A social movement perspective on corporate control.Administrative Science Quarterly. 1994;39:141-173.
33. Del Guercio D.The distorting effect of the prudent-man laws on institutional equity investments.Journal of Financial Economics. 1996;40:31-62.
34. Del Guercio D.,Hawkins J.The motivation and impact of pension fund activism.Journal of Financial Economics. 1999;52:293-340.
35. Devers C.E.,Cannella A.A.,Reilly G.P.,Yoder M.E.Executive compensation: A multidisciplinary review of recent developments.Journal of Management. 2007;33:1016-1072.
36. Eisenhardt K.M.Agency theory: An assessment and review.Academy of Management Review. 1989;14:57-74.
37. Fama E.F.,Jensen M.C.Separation of ownership and control.Journal of Law and Economics. 1983;26:301-325.
38. Finkelstein S.,Hambrick D.C.,Cannella A.A.Strategic leadership: Theory and research on executives, top management teams, and boards. New York: Oxford University Press; 2009:.
39. Gaspar J.M.,Massa M.,Matos P.Shareholder investment horizons and the market for corporate control.Journal of Financial Economics. 2005;76:135-165.
40. Gillan S.L.,Starks L.T.Corporate governance, corporate ownership, and the role of institutional investors: A global perspective.Journal of Applied Finance. 2003;13:4-22.
41. Gilson R.J.,Kraakman R.Reinventing the outside director: An agenda for institutional investors.Stanford Law Review. 1991;43:863-906.
42. Gray S.R.,Cannella A.A.The role of risk in executive compensation.Journal of Management. 1997;23:517-540.
43. Hall B.J.,Liebman J.B.Are CEOs really paid like bureaucrats?.Quarterly Journal of Economics. 1998;113:653-691.
44. Hall B.J.,Murphy K.J.The trouble with stock options.Journal of Economic Perspectives. 2003;17:49-70.
45. Hartzell J.C.,Starks L.T.Institutional investors and executive compensation.Journal of Finance. 2003;58:2351-2374.
46. Hayward M.L. A.,Boeker W.Power and conflicts of interest in professional firms: Evidence from investment banking.Administrative Science Quarterly. 1998;43:1-22.
47. Holmstrom B.Moral hazard and observability.Bell Journal of Economics. 1979;10:74-91.
48. Holmstrom B.,Milgrom P.Aggregation and linearity in the provision of intertemporal incentives.Econometrica. 1987;55:303-328.
49. Holmstrom B.,Tirole J.Market liquidity and performance monitoring.Journal of Political Economy. 1993;101:678-709.
50. Hoskisson R.E.,Hitt M.A.,Johnson R.A.,Grossman W.Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies.Academy of Management Journal. 2002;45:697-716.
51. Ke B.,Petroni K.,Safieddine A.Ownership concentration and sensitivity of executive pay to accounting performance: Evidence from publicly and privately-held insurance companies.Journal of Accounting and Economics. 1999;28:185-209.
52. Levitz J.Do mutual funds back CEO pay? Study finds firms failed to use voting power in favor of linking compensation to performance.Wall Street Journal. 2006;:.
53. Mace M.L.Directors: Myth and reality. Boston: Harvard University Press; 1971:.
54. Main B.G.,O'Reilly C.,Wade J.The CEO, the board of directors and executive compensation: Economic and psychological perspectives.Industrial and Corporate Change. 1995;4:293-332.
55. Mehran H.,Stulz R.M.The economics of conflicts of interest in financial institutions.Journal of Financial Economics. 2007;85:267-296.
56. Murphy, K. J. 1999. Executive compensation. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics: 2485-2563. Amsterdam: North-Holland.
57. Murphy K.J.,Van Nuys K.Governance, behavior, and performance of state and corporate pension funds. Cambridge, MA: Harvard University; 1994:.
58. O'Reilly C.A.,Main B.G.,Crystal G.S.CEO compensation as tournament and social-comparison: A tale of two theories.Administrative Science Quarterly. 1988;33:257-274.
59. Parrino R.,Sias R.W.,Starks L.T.Voting with their feet: Institutional ownership changes around forced CEO turnover.Journal of Financial Economics. 2003;68:3-46.
60. Petersen M.A.Estimating standard errors in finance panel data sets: Comparing approaches.Review of Financial Studies. 2009;22:435-480.
61. Pfeffer J.,Salancik G.R.The external control of organizations: A resource dependence perspective. New York: Harper & Row; 1978:.
62. Pollock T.G.,Fischer H.M.,Wade J.B.The role of power and politics in the repricing of executive options.Academy of Management Journal. 2002;45:1172-1182.
63. Rediker K.J.,Seth A.Boards of directors and substitution effects of alternative governance mechanisms.Strategic Management Journal. 1995;16:85-99.
64. Ryan L.V.,Schneider M.The antecedents of institutional investor activism.Academy of Management Review. 2002;27:554-573.
65. Sanders W.G.Behavioral responses of CEOs to stock ownership and stock option pay.Academy of Management Journal. 2001;44:477-492.
66. Smith G.S.,Swan P.L.Too good to be true: Do concentrated institutional investors really reduce executive compensation whilst raising incentives?. Sydney, Australia: University of New South Wales, Kensington; 2008:.
67. Tosi H.L.,Katz K.P.,Gomez-Mejia L.R.Disaggregating the agency contract: Effects of monitoring, incentive alignment, and term in office on agent decision making.Academy of Management Journal. 1997;40:584-602.
68. Werner S.,Tosi H.L.,Gomez-Mejia L.Organizational governance and employee pay: How ownership structure affects the firm's compensation strategy.Strategic Management Journal. 2005;26:377-384.
69. Wiseman R.M.,Gomez-Mejia L.R.A behavioral agency model of managerial risk taking.Academy of Management Review. 1998;23:133-153.
70. Yermack D.Do corporations award CEO stock options effectively?.Journal of Financial Economics. 1995;39:237-269.
71. Zajac E.J.,Westphal J.D.The costs and benefits of managerial incentives and monitoring in large U.S. corporations: When is more not better.Strategic Management Journal. 1994;15:121-142.
72. Zhang X.M.,Bartol K.M.,Smith K.G.,Pfarrer M.D.,Khanin D.M.CEOs on the edge: Earnings manipulation and stock-based incentive misalignment.Academy of Management Journal. 2008;51:241-258.