{"title":"Institutional Monitoring Of Sticky CEO Compensation","authors":"Daecheon Yang, Kyoungwon Mo","doi":"10.19030/JABR.V34I2.10131","DOIUrl":null,"url":null,"abstract":"This study examines the monitoring role of institutional investors in both mitigating the degree of downward-sticky CEO compensation and alleviating the undesirable effects of the sticky compensation on shareholder wealth. Particularly, we parallel the literature on “pay for performance” and institutional monitoring role to critically examine the measure of fluctuating pay-for-performance sensitivity, re-characterize the asymmetric compensation-performance link, and then capture managerial rent extraction. We find that sticky CEO compensation is significantly and negatively associated with firm value. Further, we find that institutional ownership decreases the compensation stickiness in underperforming firms and ameliorates its value-deteriorating effect.","PeriodicalId":40064,"journal":{"name":"Journal of Applied Business Research","volume":"34 1","pages":"309-324"},"PeriodicalIF":0.0000,"publicationDate":"2018-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Applied Business Research","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.19030/JABR.V34I2.10131","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"Business, Management and Accounting","Score":null,"Total":0}
引用次数: 1
Abstract
This study examines the monitoring role of institutional investors in both mitigating the degree of downward-sticky CEO compensation and alleviating the undesirable effects of the sticky compensation on shareholder wealth. Particularly, we parallel the literature on “pay for performance” and institutional monitoring role to critically examine the measure of fluctuating pay-for-performance sensitivity, re-characterize the asymmetric compensation-performance link, and then capture managerial rent extraction. We find that sticky CEO compensation is significantly and negatively associated with firm value. Further, we find that institutional ownership decreases the compensation stickiness in underperforming firms and ameliorates its value-deteriorating effect.
期刊介绍：
The Journal of Applied Business Research (JABR) welcomes articles in all areas of applied business and economics research. Both theoretical and applied manuscripts will be considered for publication; however, theoretical manuscripts must provide a clear link to important and interesting business and economics applications. Using a wide range of research methods including statistical analysis, analytical work, case studies, field research, and historical analysis, articles examine significant applied business and economics research questions from a broad range of perspectives. The intention of JABR is to publish papers that significantly contribute to these fields.
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