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Ownership concentration and executive compensation in closely held firms: Evidence from Hong Kong [An article from: Journal of Empirical Finance]
Book Details
PublisherElsevier
ISBN / ASINB000RR5Z8S
ISBN-13978B000RR5Z83
AvailabilityAvailable for download now
Sales Rank99,999,999
MarketplaceUnited States 🇺🇸
Description
This digital document is a journal article from Journal of Empirical Finance, published by Elsevier in . The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
Controlling shareholders, who often manage the firms they control, can expropriate minority shareholders in many ways, which are usually referred to as ''tunneling''. One of these ways is for owners-managers to set the level of their own compensation. We test the relationship between ownership concentration and executive compensation, using panel data for a sample of 412 Hong Kong firms during 1995-1998. We find a positive relationship between managerial ownership and cash emoluments for levels of ownership of up to 35% in small and in family controlled firms, and for up to 10% in large firms. Our tests show that the observed relationships do not result from compensation serving as a proxy for managerial effort. We interpret these findings as suggesting that in the presence of information asymmetry between entrenched managers and outside investors the former may use their ownership rights to extract higher salaries for themselves. There is also weaker evidence that top executives with larger shareholdings may be using dividends as a way of supplementing their cash salaries.
Description:
Controlling shareholders, who often manage the firms they control, can expropriate minority shareholders in many ways, which are usually referred to as ''tunneling''. One of these ways is for owners-managers to set the level of their own compensation. We test the relationship between ownership concentration and executive compensation, using panel data for a sample of 412 Hong Kong firms during 1995-1998. We find a positive relationship between managerial ownership and cash emoluments for levels of ownership of up to 35% in small and in family controlled firms, and for up to 10% in large firms. Our tests show that the observed relationships do not result from compensation serving as a proxy for managerial effort. We interpret these findings as suggesting that in the presence of information asymmetry between entrenched managers and outside investors the former may use their ownership rights to extract higher salaries for themselves. There is also weaker evidence that top executives with larger shareholdings may be using dividends as a way of supplementing their cash salaries.
