EconPapers    
Economics at your fingertips  
 

How do sovereign wealth funds pay their portfolio companies’ executives? Evidence from Kuwait

Bader S. Alhashel and Sulaiman H. Albader

International Review of Economics & Finance, 2020, vol. 67, issue C, 303-322

Abstract: Sovereign wealth funds (SWFs) are major players in the global markets. We contribute to the corporate governance literature by examining the possible value SWFs bring to their domestic holdings. We specifically examine the impact of SWFs’ ownership on firm executive compensation. Using data on Kuwaiti SWFs, we find that the pay-performance relationship diminishes as the cash flow rights of the SWF are greater. Moreover, having the SWF as the ultimate owner in the ownership chain of the firm does not alleviate the adverse effects of the divergence in cash flow and control rights. This evidence supports the notion that SWFs impose agency costs on their targets.

Keywords: Executive compensation; Firm performance; Ownership structure; Sovereign wealth funds; Corporate governance (search for similar items in EconPapers)
JEL-codes: G15 G23 G32 G34 G38 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S105905602030040X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:67:y:2020:i:c:p:303-322

DOI: 10.1016/j.iref.2020.02.003

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-07-01
Handle: RePEc:eee:reveco:v:67:y:2020:i:c:p:303-322