Active Institutional Shareholders and Costs of Monitoring: Evidence from Executive Compensation

@article{Almazn2004ActiveIS,
  title={Active Institutional Shareholders and Costs of Monitoring: Evidence from Executive Compensation},
  author={A. Almaz{\'a}n and J. Hartzell and L. Starks},
  journal={Financial Management},
  year={2004},
  volume={34},
  pages={5-34}
}
  • A. Almazán, J. Hartzell, L. Starks
  • Published 2004
  • Business
  • Financial Management
  • Although evidence suggests that institutional investors play a role in monitoring management, not all institutions are equally willing or able to serve this function. We present a stylized model that examines the effects of institutional monitoring on executive compensation. The model predicts that institutions' influence on managers' pay-for-performance sensitivity and level of compensation is enhanced when institutions have lower implied costs of monitoring, but that these effects are… CONTINUE READING
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