Institutional investors’ monitoring attention, CEO compensation, and relative performance evaluation

Cai Liu*, Chao Yin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

This paper examines whether the monitoring attention of institutional investors can influence CEO compensation. We find that higher motivated monitoring institutional ownership (IO) is associated with higher pay-performance-sensitivity of CEO compensation. Further, we find that only institutional investors with very high monitoring attention can positively affect the pay-performance-sensitivity. Finally, we document that CEO pay-performance-sensitivity is more, if not only, related to the unsystematic component of corporate performance in firms with higher monitoring IO.

Original languageEnglish
Article number104121
Pages (from-to)1-13
Number of pages13
JournalFinance Research Letters
Volume56
Early online date16 Jun 2023
DOIs
Publication statusPublished - Sept 2023

Keywords / Materials (for Non-textual outputs)

  • CEO compensation
  • institutional investor
  • monitoring attention
  • relative performance evaluation

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