Document Type

Contribution to Book

Publication Date

2004

Source Publication

Advances in Financial Economics

Abstract

This study investigates whether block acquisitions lead to changes in board and CEO compensation characteristics and finds that block purchasers do not play a significant role in improving the firm’s governance practices. However, the majority of professional investors have sold their block within a year, suggesting that they do not own their stock long enough to alter governance policies nor to benefit from such changes. For the smaller number of firms where a new blockholder maintains their investment for more than a year, the use of equity based CEO compensation increases while the use of cash based compensation decreases.

Comments

"Do Outside Blockholders Influence Corporate Governance Practices?" in Corporate Governance (Advances in Financial Economics, Volume 9). Eds. Mark Hirschey, Kose John and, Anil K. Makhija. Emerald Group Publishing Limited, 2004, pp.81-101. Permalink: http://www.emeraldinsight.com/books.htm?chapterid=1761359