Institutional investors and director pay: An empirical study of UK companies

Dong, Min; Ozkan, Aydin

Abstract

This paper empirically examines the determinants of director pay for a sample of listed non-financial firms in the UK by focusing on the effects of institutional ownership on both director pay and pay-performance relationship. Our analysis reveals that institutional investors, as a whole, make no appreciable difference in the determination of director pay level and pay-performance relationship. However, after we divide institutions into "dedicated" and "transient" groups. We show that dedicated institutions restrain the level of director pay and strengthen pay-performance link. This is consistent with our expectation that dedicated (long-horizon) institutions are more involved in corporate governance and serve a better monitoring and disciplining role than other short-horizon institutions. © 2007 Elsevier B.V. All rights reserved.

Citation

Dong, M., & Ozkan, A. (2008). Institutional investors and director pay: An empirical study of UK companies. Journal of Multinational Financial Management, 18(1), 16-29. https://doi.org/10.1016/j.mulfin.2007.06.001

• Journal Article Type: Article
• Acceptance Date: Jun 18, 2007
• Online Publication Date: Jun 28, 2007
• Publication Date: Feb 1, 2008
• Deposit Date: Nov 13, 2014
• Journal: Journal Of Multinational Financial Management
• Print ISSN: 1042-444X
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 18
• Issue: 1
• Pages: 16-29
• DOI: https://doi.org/10.1016/j.mulfin.2007.06.001
• Keywords: Economics and Econometrics; Finance
• Public URL: https://hull-repository.worktribe.com/output/466355
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1042444X07000308