The impact of ownership structure on CEO competition. Evidence from UK
This paper investigates the impact of institutional ownership on the CEO compensation level for 386 UK listed firms for period 2009-2014. This study documented that institutional ownership has significant negative impact on the level of total CEO compensation and cash compensation, which represents the presence of active monitoring of institutional investors. Our evidence indicated that ownership structure is an important determinant of CEO compensation. Furthermore, this paper investigated the impact of other governance- and CEO-specific determinants on the CEO compensation level for UK listed firms. Surprisingly, none of these variables explain the variation in CEO's compensation. These insignificant findings show that there are maybe some other different factors of CEO compensation. In addition, we have found that CEO compensation is higher among larger firms and firms with higher growth opportunities, which can be interpreted as reflecting demand for higher quality CEO talent. Moreover, obtained results showed that the level of CEO compensation is lower when the institutional ownership concentrated.
Faculteit der Managementwetenschappen