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Institutional investors, controlling shareholders and CEO pay‐performance relationship: evidence from China
Author(s) -
Zhang Dan,
Ma Shiguang,
Pan Xiaofei
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12580
Subject(s) - shareholder , incentive , business , institutional investor , china , state ownership , sample (material) , competition (biology) , accounting , monetary economics , foreign ownership , corporate governance , emerging markets , market economy , finance , economics , foreign direct investment , political science , law , ecology , chemistry , macroeconomics , chromatography , biology
Using a large sample of China’s listed firms between 2005 and 2015, we find that domestic mutual funds have a positive effect on the CEO pay‐performance relationship, and this effect becomes stronger when their ownership is higher and closer to the controlling shareholder’s ownership. This effect is stronger in non‐state‐owned enterprises (non‐SOEs), firms facing weaker industry competition incentives, and firms located in more developed regions. However, Qualified Foreign Institutional Investors (QFIIs) do not have such an influence. Overall, our study contends that the effectiveness of institutional investors’ monitoring role is subject to their identity, controlling shareholders and institutional environments.