Heterogeneous Institutional Investors、Spatial Effects And Executive Compensation

1930s, American economists berle and means proposed that, due to theseparation of ownership and management of the company, resulting in theasymmetric information between shareholders and managers, managers mayhave personal interests that deviate from the the target of shareholders and theshareholders is difficult to supervise the behavior of managers, resulting in harm tothe interests of shareholders, thereby producing the principal-agent problem. How tosolve the principal-agent problem, many scholars have studied a lot of differentangles.With the emergence and the rapid development of institutional investors, thedawn have appeared to resolve the issue. Institutional investors on the market isdifferent from individual investors. Compared with the majority of individualinvestors, Institutional investors hold more capital, had more stronger supervisorycapacity. And institutional investors are composed of a large number of professionals,therefore their information gathering and processing capabilities are more stronger tomake more scientific and rational decisions. Numerous studies have demonstrated thatinstitutional investors had improved the governance structure of listed companies andenhanced the performance of the company. The behavior of managers hadbeen effectively monitored.Executive compensation mechanism is an important way for institutionalinvestors in corporate governance.The listed company, shareholders must pay toestablish a scientific and reasonable mechanism to be sufficient incentives tomanagement, so as to enable managers to have a stronger incentive to maintain theinterests of shareholders so as to better improve the company’s internal governancestructure, more Shareholders and managers to effectively address the agency problembetween. Therefore, this paper chose this research direction, to explore whether our institutional investors should play a governance role. Firstly, institutional investorswill be divided into pressure-resist institutional investors and pressure-sensitiveinstitutional investors, and we have introduced a variable of the distance to study thegovernance role of the overall institutional investors and pressure-resist institutionalinvestors and pressure-sensitive institutional investors. The empirical results showthat the overall institutional investors and pressure-resist institutional investors haveplayed a positive role in governance, the distance will affect the governance role ofinstitutional investors to play, the closer, the stronger the effect for the overallinstitutional investors and pressure-resist institutional investors.