Abstract
We examine the influence of corporate governance mechanisms, namely blockholdings and board structure, on CEO pay-performance sensitivity in listed Australian firms. Results highlight blockholders' role in shaping observed pay-performance associations and their impact varying with their independence and relative magnitude of ownership. Monitoring blockholders increase the sensitivity of long-term at-risk pay to performance, better aligning manager and shareholder interests. However, consistent with a shorter investment horizon, insider blockholders increase (decrease) the responsiveness of cash bonuses (long-term at-risk pay). Finally, consistent with them affording less-effective monitoring, larger boards raise (lower) the sensitivity of known pay (long-term at-risk pay) to performance.
| Original language | English |
|---|---|
| Pages (from-to) | 447-472 |
| Number of pages | 26 |
| Journal | International Review of Finance |
| Volume | 13 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Dec 2013 |