As Jensen and Meckling (1976) discuss agency relations are caused by the assumption
that rational agent in strive of maximizing his or her utility not always would take
decisions that would maximize the wealth of the principal. The solution suggested by
these authors is that some costs must be incurred by the principal to control the agent and
as they argue it is not possible with zero cost. Important for our study methods of
controlling the agent are outside direct monitoring and self monitoring. These two
methods can be used as two alternatives (Ke, Petroni and Safieddine, 1999). The
preference of an institution for using one of these methods depends basically on the size
of their holdings and it influences CEO total compensation.