TY - JOUR
T1 - Blockholder Heterogeneity, CEO Compensation, and Firm Performance
AU - Clifford, Christopher P.
AU - Lindsey, Laura
PY - 2016/10/1
Y1 - 2016/10/1
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85006262874&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85006262874&partnerID=8YFLogxK
U2 - 10.1017/S0022109016000624
DO - 10.1017/S0022109016000624
M3 - Article
AN - SCOPUS:85006262874
SN - 0022-1090
VL - 51
SP - 1491
EP - 1520
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 5
ER -