Monitoring versus bonding: shareholder rights and management compensation. (includes appendix)

From: Financial Management | Date: September 22, 1995| Author: Lippert, Robert L.; Moore, William T. | Copyright information

Using a sample of nearly 700 firms, we document a significant level of substitution between monitoring efforts by shareholders and bonding of Chief Executive Officers' (CEO) compensation with shareholder wealth. Direct shareholder monitoring effectiveness is measured by various dimensions of voting rights, e.g., equal voting, cumulative voting, and confidential voting. Indirect monitoring is measured by the degree of independence of the board of directors. Bonding of CEO compensation with sha...

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