CEO Compensation: The Influence of Foreign and Institutional Investors

Abstract: The purpose of this paper is to contribute to the research area on the connection between CEO compensation and institutional and foreign ownership using data on Swedish firms. We study the level of pay and performance-based compensation as well as probe further into determinants of CEO compensation in Sweden. We do not find support for an effect of institutional and foreign investors for the level of compensation or performance-based compensation. However, we find results supporting an effect of a subgroup of institutional owners on CEO compensation. Our results also show that firm size and growth opportunities are the most important factors in explaining CEO compensation in Swedish listed firms. Furthermore, we find interesting initial results suggesting that CEO ownership may also be an important factor in explaining CEO compensation.