DO OUTSIDE BLOCKHOLDERS INFLUENCE CORPORATE GOVERNANCE PRACTICES?

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.

Citation

Peck, S.W. (2004), "DO OUTSIDE BLOCKHOLDERS INFLUENCE CORPORATE GOVERNANCE PRACTICES?", Hirschey, M., and, K.J. and Makhija, A.K. (Ed.) Corporate Governance (Advances in Financial Economics, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 81-101. https://doi.org/10.1016/S1569-3732(04)09004-8