Abstract
ABSTRACT This paper investigates the influence of non-controlling large shareholders (NLSs) on CEO pay-performance sensitivity (PPS), using over 2,000 Chinese firms. We find that NLSs’ equity ownership or Shapley value is positively related to CEO PPS, suggesting that cash-flow rights or real voting power of NLSs help align the interests between CEOs and shareholders. This positive impact is more prominent when the benefit of monitoring is larger. There is also preliminary evidence that different types of NLSs boost CEO incentives through different channels. Overall, our study helps understand the monitoring role of NLSs in emerging markets.
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