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Blockholders on Boards and CEO Compensation, Turnover and Firm Valuation

81 Pages Posted: 7 Aug 2009 Last revised: 10 Jan 2018

Anup Agrawal

University of Alabama - Culverhouse College of Commerce & Business Administration

Tareque Nasser

Kansas State University

Date Written: January 10, 2018

Abstract

We find that the presence of independent directors who are blockholders (IDBs) in firms promotes better CEO contracting and monitoring, and higher firm valuation. Using a panel of about 11,500 firm-years with a unique, hand-collected dataset on IDB-identity and a novel instrument, we find that firms with IDBs have lower excess CEO pay, lower flow and stock of CEO equity incentives, and higher valuations. These effects are substantial and robust. Our findings imply that by making it easier for blockholders to obtain a board seat, proxy access rules or bylaws can benefit shareholders.

Keywords: Boards of Directors, Blockholders, Executive Compensation, CEO Turnover, Firm Valuation

JEL Classification: G32, G34, J33, M52

Suggested Citation

Agrawal, Anup and Nasser, Tareque, Blockholders on Boards and CEO Compensation, Turnover and Firm Valuation (January 10, 2018). CELS 2009 4th Annual Conference on Empirical Legal Studies Paper; AFA 2012 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1443431 or http://dx.doi.org/10.2139/ssrn.1443431

Anup Agrawal (Contact Author)

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Commerce
EFLS, Box 870224
Tuscaloosa, AL 35487-0224
United States
205-348-8970 (Phone)
205-348-0590 (Fax)

HOME PAGE: http://culverhouse.ua.edu/faculty/profile/4

Tareque Nasser

Kansas State University ( email )

2097 BB, 1301 Lovers Lane
Department of Finance
Manhattan, KS 66506
United States
(785) 532-4375 (Phone)
(785) 532-6822 (Fax)

HOME PAGE: http://cba.k-state.edu/faculty-and-staff/faculty-directory/Nasser-Tareque.html

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