Monitoring role of institutional and family block-holders in Canadian corporations Online publication date: Mon, 02-Sep-2013
by George F. Tannous; Fan Yang; Weiwei Jiang
International Journal of Corporate Governance (IJCG), Vol. 4, No. 3, 2013
Abstract: This study examines whether the monitoring provided by family block-holders is more or less effective than the monitoring provided by institutional block-holders. The data consist of compensation and performance data of Canadian corporations. We measure the elasticity and the sensitivity of bonus and equity-based compensation to return on assets and market-adjusted return as measures of performance. We interpret high and significant elasticity and sensitivity to be indicators of effective monitoring. We find that Chief Executive Officer (CEO) bonus compensation is elastic and sensitive to performance in family-controlled firms but not in institution-controlled or widely-held corporations. Equity-based compensation is neither elastic nor sensitive to performance. Overall, the study implies that the monitoring provided by institutional block-holders is ineffective in linking CEO incentive compensation to performance. Thus, shareholders should continue their efforts to improve the mechanisms by which they monitor managers.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Corporate Governance (IJCG):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook