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Institutional investors, controlling shareholders and CEO pay‐performance relationship: evidence from China

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  • Dan Zhang
  • Shiguang Ma
  • Xiaofei Pan

Abstract

Using a large sample of China’s listed firms between 2005 and 2015, we find that domestic mutual funds have a positive effect on the CEO pay‐performance relationship, and this effect becomes stronger when their ownership is higher and closer to the controlling shareholder’s ownership. This effect is stronger in non‐state‐owned enterprises (non‐SOEs), firms facing weaker industry competition incentives, and firms located in more developed regions. However, Qualified Foreign Institutional Investors (QFIIs) do not have such an influence. Overall, our study contends that the effectiveness of institutional investors’ monitoring role is subject to their identity, controlling shareholders and institutional environments.

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  • Dan Zhang & Shiguang Ma & Xiaofei Pan, 2021. "Institutional investors, controlling shareholders and CEO pay‐performance relationship: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 467-498, March.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:1:p:467-498
    DOI: 10.1111/acfi.12580
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