References (55)



Large Shareholders and CEO Performance-Based Pay: New Evidence from Privately-Held Firms

Huasheng Gao

Nanyang Technological University

Kai Li

University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

October 8, 2014

In this paper we study CEO contract design employing a unique dataset on privately-held and public firm CEO annual compensation over the period 1999-2011. Compared to public firms, privately-held firms have less diffuse ownership and stronger shareholder monitoring. We first show that both private and public firm CEO pay is positively and significantly related to firm accounting performance, and that the pay-performance link is much weaker in privately-held firms. We then show that the above findings are robust to accounting for firms’ self-selection into being privately-held, and other differences between privately-held and public firms. Reconciling prior mixed evidence, we show that there is an overall negative relation between ownership concentration and CEO performance-based pay, while at the low end of ownership concentration, there is a positive relation between the two. We conclude that the presence of large shareholders generally substitutes for CEO performance-based compensation contracts, but becomes a complement in diffusely-held firms.

Number of Pages in PDF File: 57

Keywords: CEO pay; ownership concentration; pay-performance sensitivity; privately-held firms; public firms; shareholder monitoring

JEL Classification: G34

working papers series

Download This Paper

Date posted: April 30, 2012 ; Last revised: October 9, 2014

Suggested Citation

Gao, Huasheng and Li, Kai, Large Shareholders and CEO Performance-Based Pay: New Evidence from Privately-Held Firms (October 8, 2014). Available at SSRN: http://ssrn.com/abstract=2047997 or http://dx.doi.org/10.2139/ssrn.2047997

Contact Information

Huasheng Gao (Contact Author)
Nanyang Technological University ( email )
S3 B2-A28 Nanyang Avenue
Singapore, 639798
HOME PAGE: http://www3.ntu.edu.sg/home/hsgao/
Kai Li
University of British Columbia (UBC) - Sauder School of Business ( email )
2053 Main Mall
Vancouver, BC V6T 1Z2
604-822-8353 (Phone)
604-822-4695 (Fax)
HOME PAGE: http://finance.sauder.ubc.ca/~kaili
China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030

Feedback to SSRN

Paper statistics
Abstract Views: 1,601
Downloads: 316
Download Rank: 55,931
References:  55

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.500 seconds