Institutional Ownership and Monitoring Effectiveness: It's Not Just How Much but What Else You Own

Published Online:https://doi.org/10.1287/orsc.1080.0359

References

  • Agrawal A., Mandelker G. Large shareholders and the monitoring of managers. J. Financial Quant. Anal. (1990) 25(2):143–161CrossrefGoogle Scholar
  • Agrawal A., Mandelker G. Shark repellents and the role of institutional investors in corporate governance. Managerial Decision Econom. (1992) 13(1):15–22CrossrefGoogle Scholar
  • Aiken L., West S.Multiple Regression: Testing and Interpreting Interactions (1991) (Sage, Newbury Park, CA) Google Scholar
  • Almazan A., Hartzell J. C., Starks L. Active institutional shareholders and costs of monitoring: Evidence from executive compensation. Financial Management (2005) 34(4):5–34CrossrefGoogle Scholar
  • Amihud Y., Lev B. Risk reduction as a managerial motive for conglomerate mergers. Bell J. Econom. (1981) 12(2):605–617CrossrefGoogle Scholar
  • Anderson R. C., Reeb D. M. Founding-family ownership and firm performance: Evidence from the S&P 500. J. Finance (2003) 58(3):1301–1327CrossrefGoogle Scholar
  • Beatty R. P., Zajac E. J. Managerial incentives, monitoring and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings. Admin. Sci. Quart. (1994) 39(2):313–335CrossrefGoogle Scholar
  • Bebchuk L., Fried J.Pay without Performance: The Unfulfilled Promise of Executive Compensation (2004) (Harvard University Press, Cambridge, MA) Google Scholar
  • Bebchuk L. A., Fried J. M., Walker D. I. Managerial power and rent extraction in the design of executive compensation. Univ. Chicago Law Rev. (2002) 69(3):751–846CrossrefGoogle Scholar
  • Bennett J. A., Sias R. W., Starks L. T. Greener pastures and the impact of dynamic institutional preferences. Rev. Financial Stud. (2003) 16(4):1203–1238CrossrefGoogle Scholar
  • Berger P. G., Ofek E., Yermack D. L. Managerial entrenchment and capital structure decisions. J. Finance (1997) 52(4):1411–1438CrossrefGoogle Scholar
  • Berle A. A., Means G. C.The Modern Corporation and Private Property (1932) (Macmillan, New York) Google Scholar
  • Bethel J. E., Liebeskind J. P., Opler T. Block share purchases and corporate performance. J. Finance (1998) 53(2):605–634CrossrefGoogle Scholar
  • Bhide A. Efficient markets, deficient governance: US securities regulations protect investors and enhance market liquidity, but do they alienate managers and shareholders? Harvard Bus. Rev. (1994) 72(6):129–139Google Scholar
  • Bloom M., Milkovich G. T. Relationships among risk, incentive pay, and organizational performance. Acad. Management J. (1998) 41(3):283–297CrossrefGoogle Scholar
  • Brealey R. A., Myers S.Principles of Corporate Finance (2003) (Irwin/McGraw-Hill, New York) Google Scholar
  • Bushee B. J. The influence of institutional investors on myopic R&D investment behavior. Accounting Rev. (1998) 73(3):305–333CrossrefGoogle Scholar
  • Carleton W. T., Nelson J. M., Weisbach M. S. The influence of institutions on corporate governance through private negotiations: Evidence from TIAA-CREF. J. Finance (1998) 53:1335–1362CrossrefGoogle Scholar
  • Coffee J. C. Liquidity versus control: The institutional investor as corporate monitor. Columbia Law Rev. (1991) 91(6):1277–1368CrossrefGoogle Scholar
  • Conyon M. J., Peck S. I. Board control, remuneration committees, and top management compensation. Acad. Management J. (1998) 41(2):146–157CrossrefGoogle Scholar
  • Core J. E., Holthausen R. W., Larcker D. F. Corporate governance, chief executive officer compensation, and firm performance. J. Financial Econom. (1999) 51:371–406CrossrefGoogle Scholar
  • Daily C. M., Johnson J. L., Ellstrand A. E., Dalton D. R. Compensation committee composition as a determinant of CEO compensation. Acad. Management J. (1998) 41(2):209–220CrossrefGoogle Scholar
  • Daily M. C., Dalton D. R., Rajagopalan N. Governance through ownership: Centuries of practice, decades of research. Acad. Management J. (2003) 46(2):151–158CrossrefGoogle Scholar
  • Dalton D. R., Daily C. M., Certo S. T., Roengpitya R. Meta-analyses of financial performance and equity: Fusion or confusion? Acad. Management J. (2003) 46(1):13–26CrossrefGoogle Scholar
  • David P., Kochhar R., Levitas E. The effect of institutional investors on the level and mix of CEO compensation. Acad. Management J. (1998) 41(2):200–208CrossrefGoogle Scholar
  • Del Guercio D., Hawkins J. The motivation and impact of pension fund activism. J. Financial Econom. (1999) 52(3):293–340CrossrefGoogle Scholar
  • Demsetz H. The structure of corporate ownership and the theory of the firm. J. Law Econom. (1983) 26:375–390CrossrefGoogle Scholar
  • Demsetz H. Corporate control, insider trading, and rates of return. Amer. Econom. Rev. (1986) 76(2):313–316Google Scholar
  • Drucker P. E.The Unseen Revolution: How Pension Fund Socialism Came to America (1976) (Heinemann, London) Google Scholar
  • Dyl E. A. Corporate control and management compensation: Evidence on the agency problem. Managerial Decision Econom. (1988) 9:21–25CrossrefGoogle Scholar
  • Eakins S. G., Stansell S. R., Wertheim P. E. Institutional portfolio composition: An examination of the prudent investment hypothesis. Quart. Rev. Econom. Finance (1998) 38(1):93–109CrossrefGoogle Scholar
  • Eisenhardt K. Agency theory: An assessment and review. Acad. Management Rev. (1989) 14(1):57–74CrossrefGoogle Scholar
  • Finkelstein S., Boyd B. K. How much does the CEO matter? The role of managerial discretion in the setting of CEO compensation. Acad. Management J. (1998) 41(2):179–199CrossrefGoogle Scholar
  • Finkelstein S., Hambrick D. C. Chief executive compensation: A study of the intersection of markets and political processes. Strategic Management J. (1989) 10(2):121–135CrossrefGoogle Scholar
  • Frederic W. Cook & Co.CalPERS Proxy Voting (2001) . http://www.fwcook.comGoogle Scholar
  • Gaver J. J., Gaver K. M. Additional evidence on the association between the investment opportunity set and corporate financing, dividend, and compensation policies. J. Accounting Econom. (1993) 16:125–160CrossrefGoogle Scholar
  • Georgeson ShareholderAnnual Corporate Governance Review: Annual Meetings, Shareholder Initiatives, Proxy Contests (2004) . http://www.georgesun.com/usa/download/acgr.2004.pdfGoogle Scholar
  • Gillan S. L., Starks L. T. Corporate governance proposals and shareholder activism: The role of institutional investors. J. Financial Econom. (2000) 57(2):275–305CrossrefGoogle Scholar
  • Gomez-Mejia L. R., Ferris G. Executive compensation: A reassessment and a future research agenda. Research in Personnel and Human Resources Management (1994) 12(JAI Press, Greenwich, CT) 161–222Google Scholar
  • Gomez-Mejia L. R., Welbourne T. M., Gomez-Mejia L. R. Strategic design of executive compensation programs. Compensation and Benefits (1989) (Bureau of National Affairs, Inc., Washington, D.C.) 216–269Google Scholar
  • Graves S. B. Institutional ownership and corporate R&D in the computer industry. Acad. Management J. (1988) 31(2):417–428CrossrefGoogle Scholar
  • Greene W. H.Econometric Analysis (2003) 5th ed.(Pearson Education (Singapore) Pte Ltd., Delhi, India) Google Scholar
  • Hambrick D. C., Finkelstein S. The effects of ownership structure on conditions at the top: The case of CEO pay raises. Strategic Management J. (1995) 16:175–193CrossrefGoogle Scholar
  • Hartzell J. C., Starks L. T. Institutional investors and executive compensation. J. Finance (2003) 58(6):2351–2374CrossrefGoogle Scholar
  • Healy P. M. The effect of bonus schemes on accounting decisions. J. Accounting Econom. (1985) 7:85–107CrossrefGoogle Scholar
  • Healy P. M., Palepu K. G. How the quest for efficiency corroded the market. Harvard Bus. Rev. (2003) July):76–85Google Scholar
  • Hendry J., Sanderson P., Barker R., Roberts J. Owners or traders? Conceptualizations of institutional investors and their relationship with corporate managers. Human Relations (2006) 59(8):1101–1132CrossrefGoogle Scholar
  • Hill C. W., Phan P. CEO tenure as a determinant of CEO pay. Acad. Management J. (1991) 34(3):707–717CrossrefGoogle Scholar
  • Hill C. W. L., Snell S. A. Effects of ownership structure and control on corporate productivity. Acad. Management J. (1989) 32(1):25–46CrossrefGoogle Scholar
  • Hirschman A. O.Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations and States (1970) (Harvard University Press, Cambridge, MA) Google Scholar
  • Holmstrom B. Moral hazard and observability. Bell J. Econom. (1979) 14:74–91CrossrefGoogle Scholar
  • Hoskisson R. E., Hitt M. Q., Johnson R. A., Grossman W. Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies. Acad. Management J. (2002) 45(4):697–716CrossrefGoogle Scholar
  • Hsiao C.Analysis of Panel Data (1986) (Cambridge University Press, Boston) Google Scholar
  • Jensen M. C., Murphy K. J. CEO incentives—It's not how much you pay, but how. Harvard Bus. Rev. (1990) 68(3):138–153Google Scholar
  • Jensen M. C., Murphy K. J. Remuneration: Where we've been, how we got to here, what are the problems, and how to fix them. (2004) . Finance Working Paper 44/2004, ECGI and Harvard Business School, BostonGoogle Scholar
  • Karpoff J. M. The impact of shareholder activism on target companies: A survey of empirical findings. (2001) . Working paper, University of Washington, SeattleGoogle Scholar
  • Karpoff J. M., Malatesta P. H., Walkling R. A. Corporate governance and shareholder initiatives: Empirical evidence. J. Financial Econom. (1996) 42(3):365–395CrossrefGoogle Scholar
  • Khan R., Dharwadkar R., Brandes P. Institutional ownership and CEO compensation: A longitudinal examination. J. Bus. Res. (2005) 58(8):1078–1088CrossrefGoogle Scholar
  • Kochhar R., David P. Institutional investors and firm innovation: A test of competing hypotheses. Strategic Management J. (1996) 17(1):73–84CrossrefGoogle Scholar
  • Lambert R. A., Larcker D. F., Weigelt K. How sensitive is executive compensation to organizational size? Strategic Management J. (1991) 12(5):395–402CrossrefGoogle Scholar
  • Latham M. Corporate monitoring: New shareholder power tool. Financial Analysts J. (1998) 8(54):9–15CrossrefGoogle Scholar
  • Maddala G. S.Introduction to Econometrics (2002) 3rd ed.(John Wiley & Sons, Ltd., Singapore) Google Scholar
  • McGuire J., Matta E. CEO stock options: The silent dimensions of ownership. Acad. Management J. (2003) 46(3):255–265CrossrefGoogle Scholar
  • Mehran H. Executive compensation structure, ownership, and firm performance. J. Financial Econom. (1995) 38(2):163–184CrossrefGoogle Scholar
  • Murphy K. J. Corporate performance and managerial remuneration: An empirical analysis. J. Accounting Econom. (1985) 7:11–42CrossrefGoogle Scholar
  • Pedersen T., Thomsen S. Ownership structure and value of the largest European firms: The importance of owner identity. J. Management Governance (2003) 7(1CrossrefGoogle Scholar
  • Pollock T. G., Fischer H. M., Wade J. B. The role of power and politics in the repricing of executive options. Acad. Management J. (2002) 45(6):1172–1182CrossrefGoogle Scholar
  • Pozen R. C.The Mutual Fund Business (2002) 2nd ed.(Houghton Mifflin, Boston) Google Scholar
  • Rediker K. J., Seth A. Boards of directors and substitution effects of alternate governance mechanisms. Strategic Management J. (1995) 16:85–99CrossrefGoogle Scholar
  • Roe M. J.Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (1994) (Princeton University Press, Princeton, NJ) Google Scholar
  • Roth K., O'Donnell S. Foreign subsidiary compensation strategy: An agency theory perspective. Acad. Management J. (1996) 39(3):678–703CrossrefGoogle Scholar
  • Ryan L. V., Schneider M. The antecedents of institutional investor activism. Acad. Management J. (2002) 27(4):554–573Google Scholar
  • Shin J. Y. The composition of institutional ownership and the structure of CEO compensation. (2005) . Working paper, University of Wisconsin, Madison. http://ssrn.com/abstract=639797CrossrefGoogle Scholar
  • Shleifer A., Vishny R. Large shareholders and corporate control. J. Political Econom. (1986) 94:461CrossrefGoogle Scholar
  • Shleifer A., Vishny R. W. A survey of corporate governance. J. Finance (1997) 52(2):737–783CrossrefGoogle Scholar
  • Short H., Keasey K., Keasey K., Thompson S., Wright M. Institutional shareholders and corporate governance in the United Kingdom. Corporate Governance: Economic, Management, and Financial Issues (1997) 2(Oxford University Press, West Sussex, England, UK) 18–53Google Scholar
  • Sundaramurthy C., Lyon D. W. Shareholder governance proposals and conflict of interests between inside and outside shareholders. J. Management Issues (1998) 10:30–44Google Scholar
  • Thomsen S., Pedersen T. Ownership structure and economic performance in the largest European companies. Strategic Management J. (2000) 21(6):689–705CrossrefGoogle Scholar
  • Tihanyi L., Johnson R. A., Hoskisson R. E., Hitt M. A. Institutional ownership differences and international diversification: The effects of boards of directors and technological opportunity. Acad. Management J. (2003) 46(2):195–237CrossrefGoogle Scholar
  • Tolia B. The CEO compensation puzzle: Theory and practice. (1997) . Unpublished doctoral dissertation, University of Wisconsin, MilwaukeeGoogle Scholar
  • Tosi H. L., Gomez-Mejia L. R. CEO compensation monitoring and firm performance. Acad. Management J. (1994) 37(4):1002–1016CrossrefGoogle Scholar
  • Wahal S. Pension fund activism and firm performance. J. Financial Quant. Anal. (1996) 31:1–23CrossrefGoogle Scholar
  • Westphal J. D., Zajac E. J. Substance and symbolism in CEOs' long-term incentive plans. Admin. Sci. Quart. (1994) 39:367–390CrossrefGoogle Scholar
  • Wiseman R., Gomez-Mejia L. R. A behavioral agency model of risk taking. Acad. Management Rev. (1998) 23:133–153CrossrefGoogle Scholar
  • Woidtke T. Agents watching agents?: Evidence from pension fund ownership and firm value. J. Financial Econom. (2002) 63(2):99–132CrossrefGoogle Scholar
  • Wright P., Ferris S. P., Sarin A., Awasthi V. Impact of corporate insider, blockholder, and institutional equity ownership on firm risk taking. Acad. Management J. (1996) 39(2):441–463CrossrefGoogle Scholar
  • Yermack D. Do corporations award CEO stock options effectively? J. Financial Econom. (1995) 39(2–3):237–269CrossrefGoogle Scholar
  • Zajac E. J., Westphal J. D. The costs and benefits of managerial incentives and monitoring in large U.S. corporations: When is more not better? Strategic Management J. (1994) 15:121–142CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.