Institutional Investors' Holdings, Executives' Excess Compensation and Corporate Governance

CHEN Xiao-shan; LIU Hong-duo

Volume 34 Issue 2

May 2021

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Article Navigation > Journal of Guangdong University of Finance & Economics > 2019 > 34(2): 46-59

CHEN Xiao-shan, LIU Hong-duo. Institutional Investors' Holdings, Executives' Excess Compensation and Corporate Governance[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 46-59.

Citation:

CHEN Xiao-shan, LIU Hong-duo. Institutional Investors' Holdings, Executives' Excess Compensation and Corporate Governance[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 46-59.

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Institutional Investors' Holdings, Executives' Excess Compensation and Corporate Governance

CHEN Xiao-shan¹,
LIU Hong-duo²

1.
School of Accounting, Guangdong University of Finance and Economics, Guangzhou 510320
2.
School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou 510006, China

Received Date: 2018-10-26
Available Online: 2021-05-29
Publish Date: 2019-04-28

Abstract

Abstract

The existing literature is limited to the analysis of institutional investors as indiscriminate subjects, making it still unclear of which role institutional investors play in corporate governance such as a supervisor, collaborator or bystanders. Based on the perspective of individual heterogeneity of institutional investors, this paper takes China's 2010-2017 A-share listed companies as research samples and empirically tests the heterogeneous individual institutional investors' shareholding and executives' excess compensation to investigate the role institutional investors play in corporate governance. The results show tha: On the whole, the depth and breadth of institutional investors' shareholdings can help reduce the executives' excess compensation, and the latter's suppression effect is relatively more significant; on the individual side, the proportion of stockholders in securities investment funds is positively correlated with executives' excess compensation, while the proportion of institutional investors in broker companies, securities firms, social security funds and trust companies is negatively correlated with with executives' excess compensation; there is no evidence suggesting that QFII, financial companies, and banks' shareholdings are related with executives' excess compensation. The above results show that institutional investors in broker companies, insurance companies, social security funds, and entrust companies mainly act as "supervisiors"in reducing the agency costs of listed companies; securities investment funds are more likely to be "collaborators", while investors from QFII, financial institutions, financial companies, and banks mainly play the role of "onlooker".
- institutional investors,
- executives,
- excess compensation,
- heterogeneity,
- corporate governance,
- supervisors,
- collaborators,
- bystanders

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References(34)

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