Ownership Concentation and Executive COmpenation in Closely Held Firms: Evidence from Hong Kong

Yan-Leung Cheung, Aris Stouraitis and Anita Wong
Additional contact information
Yan-Leung Cheung: City University of Hong Kong
Aris Stouraitis: City University of Hong Kong
Anita Wong: City University of Hong Kong

No 142003, Working Papers from Hong Kong Institute for Monetary Research

Abstract: Owners-managers of closely held firms effectively decide on 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 top executive cash emoluments for levels of ownership of up to 25 percent in small and in family controlled firms, and for up to 5 percent in large firms. We also find no sensitivity of pay to performance in small firms. These findings may indicate that in the presence of information asymmetry between owners-managers and outside investors the former may use their ownership rights to extract higher salaries for themselves. There is also evidence that top executives with larger shareholdings may be using dividends as a way to supplement their cash salaries. Further tests show that the observed relationships do not result from a link between compensation, performance, managerial effort, and managerial ownership. With the exception of boards of directors having an auditing committee, we find that boards cannot prevent this form of expropriation.

Keywords: ownership structure; executive compensation; corporate governance (search for similar items in EconPapers)
JEL-codes: G32 G34 G35 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2003-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.hkimr.org/uploads/publication/272/ub_full_0_2_11_wp200314_text.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.hkimr.org/uploads/publication/272/ub_full_0_2_11_wp200314_text.pdf [301 Moved Permanently]--> http://www.aof.org.hk/research/HKIMR/uploads/publication/272/ub_full_0_2_11_wp200314_text.pdf [301 Moved Permanently]--> https://www.aof.org.hk/research/HKIMR/uploads/publication/272/ub_full_0_2_11_wp200314_text.pdf)

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:hkm:wpaper:142003

Access Statistics for this paper

More papers in Working Papers from Hong Kong Institute for Monetary Research Contact information at EDIRC.
Bibliographic data for series maintained by HKIMR ().