Institutional investors and director pay

An empirical study of UK companies

Min Dong, Aydin Ozkan

Research output: Contribution to journalArticle

55 Citations (Scopus)

Abstract

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
Volume18
Issue number1
DOIs
Publication statusPublished - 1 Feb 2008
Externally publishedYes

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Empirical study
Institutional investors
Performance pay
Institutional ownership
Corporate governance
Monitoring
Performance levels

Cite this

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Institutional investors and director pay : An empirical study of UK companies. / Dong, Min; Ozkan, Aydin.

In: Journal of Multinational Financial Management, Vol. 18, No. 1, 01.02.2008, p. 16-29.

Research output: Contribution to journalArticle

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