The impact of ownership structure on Chief Executive Compensation: Case of Swedish listed firms

摘要

This paper is aimed at studying the elationship between ownership structure via theseparation of cash flow and voting right and its impact on executive compensation inSwedish list companiesUsing a cross sectional analysis of data on ownership concentration, voting right,executive compensation and control variables such as performance and company sizefrom 2008 annual report. We found out that the ownership structure of most Swedishlisted firm are concentrated with the largest owner having an average equity stake of21.7% and a voting right of 33% in the ownership structure. The separation of equitystake (cash flow right) from voting rights is a result of control enhancing devices(dual class share and pyramidal structure). The wide deviation of cash flow right andvoting right indicates a high degree of separation of control from ownership and theextend of the conflict of interest within Swedish listed firmsThe regression analysis shows that ownership variables like cash flow and votingright have no significant impact on the level of executive compensation. This is as aresult of the fact that the level of CEO compensation may depends on the industrywhere the firm operates, micro-economic fluctuations which blurt the link betweenownership concentration and the level of executive compensation and also the countryspecific characteristics like the equalitarian norms which prevails in Sweden.