New active blockholders and adjustment of CEO relative incentive ratios

Phuong L. Nguyen, Neal Galpin, Garry Twite

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)


We study the emergence of blockholders as an important mechanism that corrects deviations from target CEO relative debt-to-equity incentive ratios. We find that a new active blockholder more likely emerges when a firm deviates from target; deviations fall during the period the blockholder owns shares; and deviations fall more when the blockholder appoints a director to the firm. When a firm is above (below) target, blockholders are associated with less (more) inside debt and more (no change in) inside equity, implying there is no “one-size-fits-all” compensation change for blockholders. Outside debt and equity increase for both above and below target firms.

Original languageEnglish
Article number102127
Number of pages20
JournalJournal of Corporate Finance
Publication statusPublished - Feb 2022


  • Blockholders
  • CEO compensation
  • Inside debt

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