Institutional investors have become increasingly important as equity holders in the U.S. financial market.
This book investigates the relation between the structure of CEO compensation and the composition of firms institutional ownership in terms of investment horizons and legal type. Consistent with regulators and investors concerns that myopic investment behavior by some institutional investors leads managers to fear an earnings disappointment, I provide evidence that in companies with more shares held by institutions with short-term investment horizons, executive compensation is structured...