Institutional investors and director remuneration: do political connections matter?

Effiezal Aswadi Abdul Wahab and Rashidah Abdul Rahman

A chapter in Corporate Governance and Firm Performance, 2009, pp 139-169 from Emerald Group Publishing Limited

Abstract: This study examines the relationship between institutional investors and director remuneration in Malaysia against an important institutional backdrop of political connection. Our panel analysis of 434 firms from 1999 to 2003 finds a negative relationship between institutional ownership and director remuneration suggesting the effectiveness of institutional monitoring. Although we find no evidence to suggest a politically determined remuneration scheme, the negative relationship between institutional ownership and remuneration becomes less in politically connected firms. This suggests that political connections mitigate institutional monitoring in relationship-based economies.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(2009)0000013008

DOI: 10.1108/S1569-3732(2009)0000013008

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