Institutional investors and director remuneration: do political connections matter?

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Advances in Financial Economics

ISSN: 1569-3732
Series editor(s): Professor Kose John, Professor Anil Makhija, Professor Stephen P. Ferris

Subject Area: Economics

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Document Information:
Title:	Institutional investors and director remuneration: do political connections matter?
Author(s):	Effiezal Aswadi Abdul Wahab, Rashidah Abdul Rahman
Volume:	13 Editor(s): Mark Hirschey, Kose John, Anil K. Makhija ISBN: 978-1-84855-536-5 eISBN: 978-1-84855-537-2
Citation:	Effiezal Aswadi Abdul Wahab, Rashidah Abdul Rahman (2009), Institutional investors and director remuneration: do political connections matter?, in Mark Hirschey, Kose John, Anil K. Makhija (ed.) Corporate Governance and Firm Performance (Advances in Financial Economics, Volume 13), Emerald Group Publishing Limited, pp.139-169
DOI:	10.1108/S1569-3732(2009)0000013008 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	This study examines the relationship between institutional investors and director remuneration in Malaysia against an important institutional backdrop of political connection. Our panel analysis of 434 firms from 1999 to 2003 finds a negative relationship between institutional ownership and director remuneration suggesting the effectiveness of institutional monitoring. Although we find no evidence to suggest a politically determined remuneration scheme, the negative relationship between institutional ownership and remuneration becomes less in politically connected firms. This suggests that political connections mitigate institutional monitoring in relationship-based economies.