Institutional investors and director pay: An empirical study of UK companies

Min Dong, Aydin Ozkan

Research output: Contribution to journalArticlepeer-review

71 Citations (Scopus)


This paper empirically examines the determinants of director pay for a sample of listed non-financial firms in the UK by focusing on the effects of institutional ownership on both director pay and pay-performance relationship. Our analysis reveals that institutional investors, as a whole, make no appreciable difference in the determination of director pay level and pay-performance relationship. However, after we divide institutions into "dedicated" and "transient" groups. We show that dedicated institutions restrain the level of director pay and strengthen pay-performance link. This is consistent with our expectation that dedicated (long-horizon) institutions are more involved in corporate governance and serve a better monitoring and disciplining role than other short-horizon institutions.

Original languageEnglish
Pages (from-to)16-29
Number of pages14
JournalJournal of Multinational Financial Management
Issue number1
Publication statusPublished - 1 Feb 2008
Externally publishedYes


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