Abstract

https://ssrn.com/abstract=1644995
 
 

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Blockholder Heterogeneity, CEO Compensation, and Firm Performance


Christopher P. Clifford


University of Kentucky

Laura Anne Lindsey


Arizona State University (ASU) - Finance Department

August 25, 2011

JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS Vol. 51, No. 5, Oct. 2016, pp. 1491–1520 COPYRIGHT 2016, MICHAEL G. FOSTER SCHOOL OF BUSINESS, UNIVERSITY OF WASHINGTON, SEATTLE, WA 98195 doi:10.1017/S0022109016000624

Abstract:     
This paper examines heterogeneity in blockholder monitoring across investor type. We document which blockholder types (e.g. mutual funds, hedge funds) are more likely to be associated with active monitoring and show that firms targeted by such blockholders are more likely to increase the equity portion of Chief Executive Officer (CEO) pay. Further, using market-wide and exogenous shocks to liquidity to identify differences in efficacy across blockholder types, we observe greater operating performance improvements in actively monitored firms when passive monitoring is less effective, suggesting causal impact. We propose differences in compensation arrangements across blockholder types as a mechanism underlying blockholders’ heterogeneous role.

Number of Pages in PDF File: 55

Keywords: Blockholders, compensation, activism, monitoring, corporate governance

JEL Classification: G20, G30


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Date posted: July 19, 2010 ; Last revised: January 10, 2017

Suggested Citation

Clifford, Christopher P. and Lindsey, Laura Anne, Blockholder Heterogeneity, CEO Compensation, and Firm Performance (August 25, 2011). JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS Vol. 51, No. 5, Oct. 2016, pp. 1491–1520 COPYRIGHT 2016, MICHAEL G. FOSTER SCHOOL OF BUSINESS, UNIVERSITY OF WASHINGTON, SEATTLE, WA 98195 doi:10.1017/S0022109016000624. Available at SSRN: https://ssrn.com/abstract=1644995 or http://dx.doi.org/10.2139/ssrn.1644995

Contact Information

Christopher P. Clifford
University of Kentucky ( email )
College of Business & Economics
Lexington, KY 40506-0034
United States
859-257-3850 (Phone)
Laura Anne Lindsey (Contact Author)
Arizona State University (ASU) - Finance Department ( email )
W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States
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