Our study investigates also institutional investors’ concentration and aggregation effects
on CEO cash compensation. We found that institutional shareholding concentration
decreases CEO cash compensation, and aggregation leads to its increase. The possible
explanations for these findings are the same as that for the case of total compensation.
It can be concluded from our results that firms with institutional ownership concentration
are attractive for investment as there is so called free-rider effect. Small shareholders can
invest in these firms knowing that large shareholders are monitoring and controlling CEO
compensation. However reducing CEO compensation has its negative side. These firms
can have issues to attract and retain skilled managers. So the balance must be kept
between the two, in order to benefit the firm.