Institutional investors and CEO pay performance in Malaysian firms

Tee Chwee Ming; Yee Boon Foo; Ferdinand A. Gul; Abdul Majid

doi:10.2308/jiar-51989

Institutional investors and CEO pay performance in Malaysian firms

Tee Chwee Ming, Yee Boon Foo, Ferdinand A. Gul, Abdul Majid

Malaysia Sch of Business

Research output: Contribution to journal › Article › Research › peer-review

16 Citations (Scopus)

Abstract

This study uses Malaysian data to examine whether institutional investors affect the association between firm performance and CEO compensation. Overall, we find that total institutional investor ownership has a negative effect on the positive association between firm performance and CEO compensation, which suggests ineffective monitoring. When the institutional investors are categorized into local and foreign, we find that the negative effect is driven by local institutional ownership, consistent with the argument that foreign institutional investors are associated with better monitoring. Our results provide new insights on the association between institutional investors and the CEO compensation-firm performance relationship in an emerging economy.

Original language	English
Pages (from-to)	87-102
Number of pages	16
Journal	Journal of International Accounting Research
Volume	17
Issue number	1
DOIs	https://doi.org/10.2308/jiar-51989
Publication status	Published - 2018

Keywords

CEO compensation
Institutional investors’ domiciles
Institutional investors’ ownership
Malaysia

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10.2308/jiar-51989

Cite this

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abstract = "This study uses Malaysian data to examine whether institutional investors affect the association between firm performance and CEO compensation. Overall, we find that total institutional investor ownership has a negative effect on the positive association between firm performance and CEO compensation, which suggests ineffective monitoring. When the institutional investors are categorized into local and foreign, we find that the negative effect is driven by local institutional ownership, consistent with the argument that foreign institutional investors are associated with better monitoring. Our results provide new insights on the association between institutional investors and the CEO compensation-firm performance relationship in an emerging economy.",

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AB - This study uses Malaysian data to examine whether institutional investors affect the association between firm performance and CEO compensation. Overall, we find that total institutional investor ownership has a negative effect on the positive association between firm performance and CEO compensation, which suggests ineffective monitoring. When the institutional investors are categorized into local and foreign, we find that the negative effect is driven by local institutional ownership, consistent with the argument that foreign institutional investors are associated with better monitoring. Our results provide new insights on the association between institutional investors and the CEO compensation-firm performance relationship in an emerging economy.

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KW - Institutional investors’ domiciles

KW - Institutional investors’ ownership

KW - Malaysia

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Institutional investors and CEO pay performance in Malaysian firms

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The Relationship Between Different Institutional Investors Monitoring and Financial and Non-Financial Performance of Malaysian Firms

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Institutional investors and CEO pay performance in Malaysian firms

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Keywords

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The Relationship Between Different Institutional Investors Monitoring and Financial and Non-Financial Performance of Malaysian Firms

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