Blockholder Heterogeneity, CEO Compensation, and Firm Performance

Christopher P. Clifford, Laura Lindsey

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

This paper examines heterogeneity in blockholder monitoring across investor types. 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.

Original languageEnglish (US)
Pages (from-to)1491-1520
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Volume51
Issue number5
DOIs
StatePublished - Oct 1 2016
Externally publishedYes

Fingerprint

Blockholders
Firm performance
Chief executive officer
Monitoring
Hedge funds
Liquidity
Operating performance
Investors
Exogenous shocks
Mutual funds
Performance improvement
Equity
Efficacy

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Blockholder Heterogeneity, CEO Compensation, and Firm Performance. / Clifford, Christopher P.; Lindsey, Laura.

In: Journal of Financial and Quantitative Analysis, Vol. 51, No. 5, 01.10.2016, p. 1491-1520.

Research output: Contribution to journalArticle

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