CEO Compensation, Corporate Governance, and the Role of Institutional Investors

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Boge Wang

Abstract

In this paper, I analyze the effects of institutional investors on mitigating agency problem, focusing on adjusting CEO compensation by institutional investors from corporate governance. I discuss the theoretical basic of CEO compensation and point out that institutional investors can influence CEO from corporate governance mechanisms. From voting rights and ownership structure, institutional investors can both affect CEO compensation. Although changing salaries component of CEO compensation to performance-related pay is better than increasing in total CEO compensation, there still a lot to space for further to study how to improve efficiency of mitigating agency problem from the view of institutional investors.

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