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英国布里斯托大学企业管治论文定制Do Corporate Governance mechanisms influence CEO compensation? An empirical investigation of UK companies
Neslihan Ozkan
University of Bristol, UK
Received 13 September 2005; accepted 9 August 2006
Available online 2 October 2006
Abstract
The aim of this paper is to empirically examine the influence of corporate governance mechanisms, thatis, ownership and board structure of companies, on the level of CEO compensation for a sample of 414
large UK companies for the fiscal year 2003/2004. The results show that measures of board and ownershipstructures explain a significant amount of cross-sectional variation in the total CEO compensation, which
is the sum of cash and equity-based compensation, after controlling other firm characteristics. We findthat firms with larger board size and a higher proportion of non-executive directors on their boards pay their
CEOs higher compensation, suggesting that non-executive directors are not more efficient in monitoring thanexecutive directors. We also find that institutional ownership and block-holder ownership have a significantand negative impact on CEO compensation. Our results are consistent with the existence of active monitoringby block-holders and institutional shareholders. Finally, the results show that CEO compensation is lowerwhen the directors’ ownership is higher.

Keywords: CEO compensation; Corporate Governance

1. Introduction
CEO compensation packages have been a focus of much academic and media interest. Oneimportant question is whether corporate governance mechanisms can play a significant role in
N. Ozkan / J. of Multi. Fin. Manag. 17 (2007) 349–364 351
directors are not more efficient in monitoring than executive directors. Moreover, our results showthat institutional ownership and block-holder ownership have a significant and negative impact on
the level of total CEO and cash compensation, which suggests the existence of active monitoring
by block-holders and institutional shareholders. However, equity-based compensation does not
seem to be influenced significantly by institutional ownership, while block-holder ownership has
a negative and significant impact on equity-based compensation. Additionally, we find that firms
with a higher level of CEO ownership pay less equity-based compensation to their CEOs. Finally,
our findings show that CEO compensation is lower when the directors’ ownership is higher.4
The remainder of the paper is organized as follows: Section 2 discusses corporate governance
mechanisms and their potential influence on CEO compensation. Thus, the role of institutional
shareholders, characteristics of company boards, and ownership structure are considered. Section
3 describes data, sample characteristics, and estimation procedure, and Section 4 presents the
results. Finally, Section 5 offers conclusions.
2. Corporate governance mechanisms and CEO compensation
2.1. Institutional investors and CEO compensation
In general, institutions differ from individual investors in important ways. They hold much
larger equity stakes than individual investors; they manage large pools of investment funds and
therefore invest larger amounts in each equity. Thus, one would expect institutions to have more
incentives to monitor companies in which they have large amounts of investment at stake. The
reason is that the benefits that institutions, as large shareholders, could receive from t本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。