Abstract
According to the date from the listed companies on China’s A stock market for the period 2006-2009, we examined wether there was a relationship between institutional investors and executive incentives of listed companies. Our empirical study found that in China, institutional ownership concentration was positively related to the level of executive compensation and negatively related to executive shareholdings proportion. These results suggest that the institutional investors do not serve a monitoring role in mitigating the agency problem between shareholders and managers; they do not restrict the level of executive compensation, and just depress executive shareholding proportion to some degree. Institutional investors do not improve the merchanism of executive incentives.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Tang, Z., Gu, C.: Institutional investors participating in corporate governance: theoretical analysis, experience summaried and strategy suggestions. Jianghuai Forum 03, 37–42 (2005)
Xie, Z.: Historic turning point in internal corporate governance - the involvement of institutional investors. Contemporary Manager 12, 87 (2003) (in Chinese)
Zhong, J.: The rise of active investors - why and how U.S. institutional investors participating in corporate governance and its implications for China. International Economic Review (9-10), 41–45 (2000)
Li, W., Li, B.: The empirical study of institutional investors involved in corporate governance - Based on the experience study of CCGINK. Nankai Business Review 11(1), 4–14 (2008) (in Chinese)
Gillan, S.L., Starks, L.T.: Corporate governance proposals and shareholder activism: the role of institutional investors. Journal of Financial Economics 57, 275–305 (2000)
Guercio, D.D., Seery, L., Woidtke, T.: Do boards pay attention when institutional investor activists “just vote no? Journal of Financial Economics 90, 84–103 (2008)
Florou, A., Pope, P.: Are boards and institutional investors active monitors? Evidence from CEO dismissal. Managerial Auditing Journal 23(9), 862–872 (2008)
Wahal, S., McConnell, J.J.: Do institutional investors exacerbate managerial myopia? Journal of Corporate Finance 6, 307–329 (2000)
Hartzell, J.C., Starks, L.T.: Institutional Investors and Executive Compensation. Working Paper, University of Texas at Austin (2000)
Cornett, M.M., Alan, J.: Marcus, Anthony Saunders, Hassan Tehranian. The Impact of Institutional Ownership on Corporate Operating Performance. Working Paper, NYU Stern Department of Finance (2003)
Niclas, H.: Can we expect institutional investors to improve corporate governance? Scandinavian Journal of Management 21, 293–327 (2005)
Robert, W., Beck, M., McKinnon, R.: Problems and Limitations of Institutional Investor Participation in Corporate Governance. Journal of Corporate Governance 11(1), 65–73 (2003)
Bainbridge, S.M.: Shareholder Activism and Institutional Investors. Research Paper No. 05-20, UCLA School of Law
Jensen, M.C., Meckling, W.H.: Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3, 305–360 (1976)
Levitz, J.: Do Mutual Fund Managers Back CEO Pay? —Study Finds Firms Failed to Use Voting Power in Favor of Linking Compensation to Performance. The Wall Street Journal 28, C.1(2006)
Ferreira, M.A., Matos, P.: The colors of investors’ money: The role of institutional investors around the world. Journal of Financial Economics 88, 499–533 (2008)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Chang, B. (2011). Institutional Investors and Management Incentives: the Empirical Evidence from Chinese A-Share. In: Zhou, Q. (eds) Advances in Applied Economics, Business and Development. ISAEBD 2011. Communications in Computer and Information Science, vol 209. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23020-2_35
Download citation
DOI: https://doi.org/10.1007/978-3-642-23020-2_35
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-23019-6
Online ISBN: 978-3-642-23020-2
eBook Packages: Computer ScienceComputer Science (R0)