The Relationship between Institutional Investor and Remuneration in Family Firm

Abstract

Institutional investor interest associated with firm wealth and required monitor on board of director. In order to remaining board motivation higher remuneration should be awarded especially to family executive due to top position is among them. This study examined the relationship between the institutional investor and remuneration in family firm. Based on the sample size of this study of 537 firms listed in Bursa Malaysia with 1,611 pieces of panel data from 2007 and 2009, this study finds a significant positive relationship between the institutional investor and remuneration, which is suggests the effectiveness of institutional investor role. In addition, evidence shows that family firm is significant positive with director remuneration. However no evidence shows that institutional investor is insignificant with remuneration in family firm. This study shows that family executive does not manipulated power and control for personal interest but had similar interest with institutional investor regards to remuneration.

Keywords: Institutional Investor, Remuneration, Family Firm, Board of Director

JEL Classification: G30, G32, G34