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Additional Evidence on the Association between Director Stock Ownership and Incentive Compensation


  • Chen, Chih-Ying


Governance scholars argue that outside directors have little incentive to monitor managers when their equity stake in the firm is not significant. A sample with a substantial level of outside director shareholdings is examined and a negative relationship between incentive compensation and outside director stock ownership is found. While firms pay higher incentive compensation when they have greater investment opportunities, the compensation contains excess pay due to ineffective corporate governance. Overall, the results suggest more effective corporate governance and lower incentive compensation when outside director stock ownership is higher. Copyright 2002 by Kluwer Academic Publishers

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  • Chen, Chih-Ying, 2002. "Additional Evidence on the Association between Director Stock Ownership and Incentive Compensation," Review of Quantitative Finance and Accounting, Springer, vol. 19(1), pages 21-44, July.
  • Handle: RePEc:kap:rqfnac:v:19:y:2002:i:1:p:21-44

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    Cited by:

    1. Carlos Jiménez-Angueira & Nathan Stuart, 2015. "Relative performance evaluation, pay-for-luck, and double-dipping in CEO compensation," Review of Quantitative Finance and Accounting, Springer, vol. 44(4), pages 701-732, May.
    2. Tatyana Sokolyk, 2015. "Governance provisions and managerial entrenchment: evidence from CEO turnover of acquiring firms," Review of Quantitative Finance and Accounting, Springer, vol. 45(2), pages 305-335, August.
    3. repec:csr:wpaper:1014 is not listed on IDEAS
    4. Sugato Chakravarty & Chiraphol N. Chiyachantana & Christine Jiang, 2011. "THE CHOICE OF TRADING VENUE AND RELATIVE PRICE IMPACT OF INSTITUTIONAL TRADING: ADRs VERSUS THE UNDERLYING SECURITIES IN THEIR LOCAL MARKETS," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 34(4), pages 537-567, December.

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